LZMA, or Lempel-Ziv-Markov chain algorithm, is a data compression algorithm known for its high compression ratio and efficiency. It is widely used in software applications, particularly in the 7-Zip file archiver, which utilizes LZMA to reduce file sizes significantly while maintaining data integrity. The algorithm works by using a combination of dictionary compression and range encoding, allowing it to compress data more effectively than many other algorithms. LZMA is particularly effective for compressing large files and is often employed in scenarios where storage space is limited or data transfer speeds are critical.