Dijkstra's algorithm is a solution to the single-source shortest path problem in graphs. It finds the shortest paths from a source vertex to all other vertices. The algorithm works by maintaining a set of visited vertices and iteratively finding the shortest path to the next closest vertex. It has a running time of O(|E|+|V|log|V|) when implemented with a priority queue. Dijkstra's algorithm is widely used in applications like mapping, routing systems, and modeling disease spread.