UUID Version 5 is a type of universally unique identifier that is generated using a hashing algorithm. It creates a unique ID based on a namespace and a name, ensuring that the same input will always produce the same UUID. This version uses the SHA-1 hashing algorithm to create a 128-bit identifier. UUID Version 5 is particularly useful for applications that require consistent identifiers across different systems. It allows for the generation of unique IDs without the need for a central authority, making it ideal for distributed systems and databases where unique identification is crucial.