(PKE, Or "public-key cryptography") An encryption scheme, introduced by Diffie and Hellman in 1976, where each person gets a pair of keys, called the public key and the private key. Each person's public key is published while the private key is kept secret. Messages are encrypted using the intended recipient's public key and can only be decrypted using his private key. This is often used in conjunction with a digital signature.
The need for sender and receiver to share secret information (keys) via some secure channel is eliminated: all communications involve only public keys, and no private key is ever transmitted or shared.
RSA encryption is an example of a public-key cryptosystem.