The word ‘halal’ literally means permissible and in translation it is usually used as lawful.

The Halal food Authority rules for halal are based on Islamic Shari’ah. Opposite to halal is haram, which means unlawful or forbidden.

It is well known in the meat trade that Muslims consume halal meat. However, at times questions are asked, what is halal? In Arabic it simply means permissible or allowed. Opposite to it is haram, which means forbidden or not allowed. Arabic is the language of Qur`an, a scripture revealed to the Holy Prophet of Islam by the Almighty Allah to be followed in its entirety by the Muslims.

Now to make meat halal or permissible, an animal or poultry has to be slaughtered in a ritual way known as Zibah. To make it readily comprehended halal is somewhat like Jewish kosher and, Zibah is with some exception similar to Shechita. The Qur`an gives following underlined injunctions in chapter al-Maida 5:3 that
Zibah require animals to be alive and healthy at the time of slaughter, since carrion is forbidden and, jugular vein, carotid artery and windpipe have to be severed by a razor sharp knife by a single swipe, to incur as less a pain as possible. Here the only difference is that a rabbi will read what is required by his faith and, a Muslim will recite tasmiya or shahada, which fulfils the requirement of dedication. The question of how to overcome the issue of recitation of shahada on individual bird whence we now have poultry being slaughtered at a rate of six to nine thousand per hour, has already been addressed. A Muslim is commanded to commence all his deeds in the name of Allah.
All the flowing blood (al- An`am 6:145) must be drained out of the carcass, as blood is forbidden
Swine flesh is also forbidden, and it is repeated in few other places in the Qur`an
Forbidden is an animal that has been killed by strangling or by a violent blow, or by a headlong fall
What now becomes abundantly clear for halal purposes is that:
An animal should not be dead prior to slaughter
A Muslim should perform slaughter
Any flowing blood of the carcass should be completely drained
Choice of modern and in vogue method has to be considered with caution and, it should be mirroring to the Islamic ethos
Since pork is forbidden, halal slaughtering must not be done where pigs are slaughtered or in the vicinity of pigs slaughtering area. There are a few more edicts and rules that have to be followed in the interest of animal welfare. For example, animal has to be fed as normal and given water prior to slaughter, one animal must not see the other being slaughtered, knife should be four times the size of the neck and razor sharp, and as far as possible the slaughterer and the animal should face Qibla or Mecca and, animal must not be suffering with any ailments or any lacerations

Source: http://www.halalfoodauthority.co.uk/define.html