E85 is a blend of 15% gasoline and 85% ethanol. Many gasoline-powered engines can be converted to run on E85 with little modification. Besides being a simple alcohol, ethanol is also one of our more common alternative fuels.
Ethanol (and other biofuels, or fuels which come from living organisms) has an advantage over gasoline, which is a petrochemical meaning it is made from oil — it does not increase the CO2 content of the atmosphere. This is because nearly all the carbon that went into making the plants from which the ethanol was made came from atmospheric CO2 during the process of photosynthesis (6H2O + 6CO2 —> C6H12O6 + 6O2.)
E85, therefore, is 85% better than gasoline in terms of maintaining the carbon balance, since 100% of the carbon in gasoline has been buried for the length of human history, and ostensibly for many millions of years. Granted, there is a relatively fixed amount of carbon on Earth, but for our own sake, it is beneficial to keep as much of it out of the atmosphere as possible.
There is also a blend called E95 which is only 5% gasoline, and is used in diesel engines rather than those which normally would run gasoline. Diesel engines ignite by compression and the inclusion of 5% gasoline is just enough to put the fuel's flash point at just the right place to mimic diesel. Meanwhile, gasoline-type engines do not like to start up with less than about 15% gasoline in the fuel. Higher-than-average compression is required (one company changed their diesels to 23:1 compression) and fuel quantity delivery as well as timing probably need to be changed - trivial in the case of electronic diesels, provided there is support from the vehicle manufacturer.
Ethanol was formerly an energy-negative product, in that it took more energy (not counting sunlight) to produce than you could get by burning the ethanol in an engine. However, that has changed significantly over time, and you now get about 38% more energy out than you put in. Granted, this is nothing compared to fossil fuels, but the environmental benefits are potentially significant if the energy used to make the fuel in the first place is derived from clean sources, like solar or (well-controlled!) nuclear.
Other significant alternative fuels include biodiesel, vegetable oil (Known as WVO or SVO in alternative fuel parlance) and pure ethanol or methanol.