A disfigured and mentally unstable mercenary, Deadpool originally appeared as a villain in an issue of New Mutants, and later in issues of X-Force. The character has since starred in several ongoing series, and shares titles with other characters such as Cable. The character, known as the "Merc with a Mouth", is famous for his talkative nature and his tendency to "break the fourth wall", which is used by writers for humorous effect.
Wade Wilson was dying from cancer when the Weapon X program offered him a chance for a cure. Undergoing procedures which attempted to recreate the healing factor of Weapon X (aka Wolverine), Wilson's cancer went into overdrive, scarring him externally and neurologically. Wilson was left in a near-catatonic state; he was deemed a failure and was sent to a facility where rejects of the Weapon Plus program were locked away. While there, he became the subject of betting among the other inmates in what was known as the dead pool. In this game, the inmates gambled on whom the warden would kill next; Wilson had been chosen as a test subject for the warden's various experiments and was given high odds for death. Wilson survived, however; eventually the healing factor manifested itself and, though still scarred and insane, he mustered enough lucidity to escape. Wilson thereafter used his abilities to become a renowned - if unstable - mercenary, taking the name of Deadpool to reflect the odds that he beat.
Source: Wikipedia, "Deadpool", available under the CC-BY-SA License.