Dijkstra's algorithm is used to find the shortest paths between nodes in a graph. It works by maintaining a tentative distances priority queue, updating distances if shorter paths are found, and repeating until all shortest paths are determined. The time complexity is O(E+V log V) if using a Fibonacci heap, or O(E log E + V) for other priority queues. Dijkstra's algorithm only works for graphs without negative edge costs. It has applications in mapping, routing, and other networks.