Transaction Isolation is a key concept in database management that ensures multiple transactions can occur simultaneously without interfering with each other. It defines how and when changes made by one transaction become visible to others, helping to maintain data integrity and consistency. There are different levels of isolation that can be set, such as Read Uncommitted, Read Committed, Repeatable Read, and Serializable. Each level offers a trade-off between performance and the degree of isolation, allowing developers to choose the best fit for their application's needs while minimizing issues like dirty reads and lost updates.