Inheritance is a mechanism in Java that allows one class to acquire the properties (fields and methods) of another class. The class that inherits is called the subclass, and the class being inherited from is called the superclass. This allows code reuse and establishes an is-a relationship between classes. There are three main types of inheritance in Java: single, multilevel, and hierarchical. Method overriding and dynamic method dispatch allow subclasses to provide their own implementation of methods defined in the superclass.