A password that is only valid once. Generally, such passwords are derived from some master secret shared by an entity and an authentication server, and are calculated via a challenge-response protocol.
An authentication scheme that prevents the interception and misuse of passwords by using a different password for every session. Some examples of one-time password schemes include S/Key and many token-based authentication methods.
The purpose of a one-time password (OTP) is to make it more difficult to gain unauthorized access to restricted resources, like a computer account. Traditionally static passwords can more easily be accessed by an unauthorized intruder given enough attempts and time. By constantly altering the password, as is done with a one-time password, this risk can be greatly reduced.