An entity-relationship diagram (ERD) is a data modeling technique used to graphically represent the relationships between entities in a database. The key components of an ERD include entities, attributes, and relationships. Entities represent real-world objects, attributes describe entities, and relationships define interactions between entities. To create an ERD, the first steps are identifying entities, determining relationships between entities, analyzing relationship cardinality, and drawing the diagram. The ERD can then be converted to a relational database by creating tables for each entity and relationship with columns for each attribute.