Giclee (pronounced 'zgee-KLAY') is a method of reproducing art through a printing process very similar to modern ink-jet printers. It has become a very popular method of creating limited edition fine art reproductions. The term derives from the French verb gicler, which means 'to squirt'.

Prior to the advent of giclee printing, the standard method of reproducing art was lithography. Because this process requires the creation of a printing plate, made by scanning and color-separating the art, lithography is a fairly expensive process. The bulk of the cost is in set-up, so to make affordable prints, large numbers are required to amortize the cost over a greater quantity. Hence, lithographs are usually made in runs of at least 500-1000. Lithography is also limited to printing on smooth paper.

Giglee prints can be printed on a number of different media -- watercolors can be reproduced on watercolor paper, for instance, and can be so color-true that they are virtually indistinguishable from the original. Oil paintings can be reproduced on canvas. Because there is no 'plate' as in standard printing processes, the artwork can be scaled up or down in size, limited only by the physical limitations of the giclee printing machinery.

Artists have flocked to giclee printing as a method for making their art available to a wider audience. Where before an artist would have spent several thousand dollars to print several hundred copies by traditional methods, hoping to sell enough to recoup the investment, artists can now spend a few hundred dollars to create a few dozen giclee prints in a variety of sizes. The ability to create different sizes of giclee prints, and to print on different media, allows artists to experiment to find the size and medium most popular with the art-buying public. Since the art imagery is stored digitally, they can quickly reorder prints that sell out, and avoid the expense of having to print large quantities at one time.

Source: http://www.wisegeek.com/what-is-giclee.htm