An algorithm is a finite sequence of well-defined instructions that takes an input and produces an output in a finite amount of time. Algorithms have properties like finiteness, definiteness, generality, effectiveness, and input/output. Data structures are used to organize data in a way that supports efficient algorithms. The time and space complexity of algorithms are analyzed using asymptotic notations like Big-O, Omega, and Theta to determine worst-case, best-case, and average-case efficiency.