It is a molecule which binds to the active site of an enzyme preventing the substrate from binding and being broken down. It is a similar shape to the substrate which is why it is able to bind to the active site.
This shows it quite well:
Answered Thu 15th November, 2012 @ 17:22 by Sophie
It binds to the active site meaning that collisions between the enzyme and substrate can't occur, therefore less enzyme substrate complexes are formed due to the active site being occupied. This can be known as the lock - and - key hypothesis.