UUID Version 3 is a type of Universally Unique Identifier that generates a unique identifier based on a namespace and a name. It uses the MD5 hashing algorithm to create a 128-bit value, ensuring that the same input will always produce the same UUID. This makes it useful for generating consistent identifiers for resources. To create a UUID Version 3, you need to specify a namespace, which is also a UUID, and a name, which can be any string. The combination of these two inputs is processed through the MD5 algorithm, resulting in a unique identifier that can be used across different systems and applications.