Wikipedia says:

Anno Domini (AD or A.D.) and Before Christ (BC or B.C.) are designations used to label or number years used with the Julian and Gregorian calendars. The term Anno Domini is Medieval Latin, translated as In the year of the Lord,[1] and as in the year of Our Lord.[2][3]:782 It is sometimes specified more fully as Anno Domini Nostri Iesu (Jesu) Christi ("In the Year of Our Lord Jesus Christ"). This calendar era is based on the traditionally reckoned year of the conception or birth of Jesus of Nazareth, with AD counting years from the start of this epoch, and BC denoting years before the start of the era. There is no year zero in this scheme, so the year AD 1 immediately follows the year 1 BC. This dating system was devised in 525, but was not widely used until after 800.[4]

Wiki.answers.com says:

 Anno Domini (Medieval Latin: In the year of (the/Our) Lord), abbreviated as AD or A.D., is a designation used to number years in the Julian and Gregorian calendars. More fully, years may be also specified as Anno Domini Nostri Iesu (Jesu) Christi ("In the Year of Our Lord Jesus Christ").

The calendar era that it numbers is based on the traditionally reckoned year of the conception or birth of Jesus. Before Christ, abbreviated as BC or B.C., is used in the English language to denote years before the start of this epoch.

Translation Babylon says:

Anno Domini in English
in the year of our Lord (Latin phrase used to designate the years since the reputed date of the birth of Christ)

About.com says:

Definition: 1. Abbreviation for Anno Domini - Latin for The Year Of Our Lord - used in the Gregorian Calendar to refer to the current era. A date such as 1945 A.D. literally means 'the 1945th year of our lord', the lord in question being Jesus Christ, providing a religious context and clearly distinguishing the time from an earlier era, where B.C is used instead. The use of A.D. was popularised by Bede.

Modern historical research suggests the current A.D. date is actually wrong, as Jesus was born 4-7 years earlier than the year 1 date the Gregorian Calendar works from. However, in the modern age the actual meaning of A.D. is widely forgotten or misunderstood and the term simply signifies a different era from B.C.