(1) To break into a computer system. The term was coined in the mid-80s by hackers who wanted to differentiate themselves from individuals whose sole purpose is to sneak through security systems. Whereas crackers sole aim is to break into secure systems, hackers are more interested in gaining knowledge about computer systems and possibly using this knowledge for playful pranks. Although hackers still argue that there's a big difference between what they do and what crackers do, the mass media has failed to understand the distinction, so the two terms -- hack and crack -- are often used interchangeably.
(2) To copy commercial software illegally by breaking (cracking) the various copy-protection and registration techniques being used.