A Cache Replacement Policy is a strategy used in computer systems to manage the storage of data in a cache. When the cache is full and new data needs to be added, the policy determines which existing data should be removed to make space. This is crucial for maintaining efficient performance, as cache memory is faster than main memory. Common cache replacement policies include Least Recently Used (LRU), which removes the least recently accessed data, and First In, First Out (FIFO), which removes the oldest data first. These policies help optimize the use of cache memory, ensuring that frequently accessed data remains readily available.