LZ77 is a lossless data compression algorithm developed by Abraham Lempel and Jacob Ziv in 1977. It works by replacing repeated occurrences of data with references to a single copy, effectively reducing the size of the data. The algorithm maintains a sliding window of previously seen data, allowing it to identify and encode redundancies efficiently. The main components of LZ77 include a search buffer and a look-ahead buffer. The search buffer contains previously processed data, while the look-ahead buffer holds the upcoming data to be encoded. By finding matches between these buffers, LZ77 can create compressed output that is easy to decompress later.