The transient keyword in Java is used to indicate that a field should not be part of the serialization (which means saved, like to a file) process.

From the Java Language Specification, Java SE 7 Edition, Section 8.3.1.3. transient Fields:

Variables may be marked transient to indicate that they are not part of the persistent state of an object.

For example, you may have fields that are derived from other fields, and should only be done so programmatically, rather than having the state be persisted via serialization.

Here's a GalleryImage class which contains an image and a thumbnail derived from the image:

class GalleryImage implements Serializable
{
    private Image image;
    private transient Image thumbnailImage;

    private void generateThumbnail()
    {
        // Generate thumbnail.
    }

    private void readObject(ObjectInputStream inputStream)
            throws IOException, ClassNotFoundException
    {
        inputStream.defaultReadObject();
        generateThumbnail();
    }    
}

In this example, the thumbnailImage is a thumbnail image that is generated by invoking the generateThumbnail method.

The thumbnailImage field is marked as transient, so only the original image is serialized rather than persisting both the original image and the thumbnail image. This means that less storage would be needed to save the serialized object. (Of course, this may or may not be desirable depending on the requirements of the system -- this is just an example.)

At the time of deserialization, the readObject method is called to perform any operations necessary to restore the state of the object back to the state at which the serialization occurred. Here, the thumbnail needs to be generated, so the readObject method is overridden so that the thumbnail will be generated by calling the generateThumbnail method.

For additional information, the Discover the secrets of the Java Serialization API article (which was originally available on the Sun Developer Network) has a section which discusses the use of and presents a scenario where the transient keyword is used to prevent serialization of certain fields.