An Eddy Current is a phenomenon caused by a moving magnetic field intersecting a conductor or vice-versa. The relative motion causes a circulating flow of electrons or current within the conductor. These circulating eddies of current create electromagnets with magnetic fields that oppose the external magnetic field (see Lenz's law). The stronger the magnetic field, or greater the electrical conductivity of the conductor, the greater the currents developed, and the greater the opposing force. This is used to great effect in movement to electricity converters such as electrical generators and dynamic microphones. Friction within the conductor, or resistance, cause a dragging effect that has been used for braking and damping. Superconductors which allow perfect, loss-less conduction create a perfect eddy current that entirely cancels the opposing magnetic force allowing magnetic levitation. Eddy currents are also the root cause of skin effect in conductors carrying AC current.

Eddy currents are used for braking at the end of some roller coasters; this mechanism has no mechanical wear, and produces a very precise braking force. Typically heavy copper plates extending from the car are moved between pairs of very strong permanent magnets.

Eddy currents create losses through Joule heating, and they reduce the efficiency of many devices that use changing magnetic fields such as iron core transformers and alternating current motors. They are minimized by selecting core materials that have low electrical conductivity or by using thin sheets (laminations) of magnetic material.

Use of eddy current techniques is a common method for the inspection and condition monitoring of heat exchanger tubes.

An analogous eddy current is seen in water when dragging an oar, localised areas of turbulence give rise to vortices, which persist for a while then dissipate.