Reference counting is a memory management technique used in programming to keep track of how many references point to a particular object. Each time a reference to the object is created, the count increases, and when a reference is deleted, the count decreases. When the count reaches zero, it indicates that the object is no longer needed, allowing the system to safely reclaim the memory. This method is commonly used in languages like Objective-C and Python to manage memory automatically. While reference counting helps prevent memory leaks, it can lead to issues like circular references, where two objects reference each other, preventing their memory from being freed.