Honeypot is an exciting new technology with enormous potential for the security community.It is resource which is intended to be attacked and compromised to gain more information about the attacker and his attack techniques. They are a highly flexible tool that comes in many shapes and sizes. This paper deals with understanding what a honeypot actually is ,and how it works. The Internet is growing fast and doubling its number of websites every 53 days and the number of people using the internet is also growing. Hence, global communication is getting more important every day. At the same time, computer crimes are also increasing. Countermeasures are developed to detect or prevent attacks - most of these measures are based on known facts, known attack patterns. Countermeasures such as firewalls and network intrusion detection systems are based on prevention, detection and reaction mechanism; but is there enough information about the enemy?