Short for IP Security, a set of protocols developed to support the secure exchange of packets at the IP layer, widely used to implement Virtual Private Networks (VPNs).
An IPsec Tunnel encrypts both the header and the payload. On the receiving side, an IPSec-compliant device decrypts each packet.
For IPsec to work, the sending and receiving devices must share a public key. This is accomplished through a protocol known as Internet Security Association and Key Management Protocol/Oakley (ISAKMP/Oakley), which allows the receiver to obtain a public key and authenticate the sender using digital certificates. Source: Webopedia