The Stream API is a feature in the Java programming language that allows developers to process sequences of elements, such as collections, in a functional style. It provides a way to perform operations like filtering, mapping, and reducing data without the need for explicit iteration, making code more concise and readable. Using the Stream API, developers can easily handle large datasets by processing them in parallel, improving performance. It supports various operations, including filter, map, and collect, enabling efficient data manipulation and transformation while maintaining a clear and expressive syntax.