A Carnot engine is a theoretical heat engine that operates on the reversible Carnot cycle. It was proposed by the French physicist Sadi Carnot in 1824 to illustrate the maximum possible efficiency of a heat engine. The engine works between two temperature reservoirs: a hot reservoir that provides heat and a cold reservoir that absorbs waste heat. The efficiency of a Carnot engine depends on the temperatures of these reservoirs. It is defined as the ratio of work output to heat input, and it can never be 100% due to the second law of thermodynamics. This concept helps in understanding the limits of real-world engines.