A type of transtextuality, related to hypertextuality. In Palimpsests, Gerard Genette defines intertextuality as
A relationship of copresence between two texts or among several texts: that is to say, eidetically and typically as the actual presence of one text within another.
Types of intertextuality include quoting, allusion, and the usually frowned-upon (unless we're talking about artistic appropriation) plagiarism.

"Text" is meant in the manner meant by postmodernists and deconstructivists - almost any cultural creation can be "read" as a "text". Hence if Shakespeare's Hamlet is a text, it can be said to intertextually relate to the older Italian play which he based his play on.

Similarly,jazz, if considered a text, displays frequent intertextuality in its use of "quotes", riffs from other songs that are inserted into new songs.

Other more obvious, recent, and self-concious examples include plunderphonic music such as that made by John Oswald, and books such as "Lo's Diary", which is a retelling of Vladimir Nabakov's Lolita from the point of view of Lolita. This book, by the way, almost wasn't published, because of legal disputes with the Nabokov estate. Intellectual property battles are often a result of modern, obviously intertextual works.

update: Delving further, literary theorist Julia Kristeva is credited with coining the term intertexuality. She said "every text builds itself as a mosaic of quotations, every text is an absorption and transformation of another text". She beleives that intertextuality is central to both reading and writing.