Opal is a hydrated amorphous form of silica (SiO2·nH2O); its water content may range from 3 to 21% by weight, but is usually between 6 and 10%. Because of its amorphous character, it is classed as a mineraloid, unlike crystalline forms of silica, which are classed as minerals. It is deposited at a relatively low temperature and may occur in the fissures of almost any kind of rock, being most commonly found with limonite, sandstone, rhyolite, marl, and basalt.

There are two broad classes of opal: precious and common. Precious opal displays play-of-color (iridescence), common opal does not. Play-of-color is defined as "a pseudo chromatic optical effect resulting in flashes of colored light from certain minerals, as they are turned in white light." The internal structure of precious opal causes it to diffract light, resulting in play-of-color. Depending on the conditions in which it formed, opal may be transparent, translucent, or opaque and the background color may be white, black, or nearly any color of the visual spectrum. Black opal is considered to be the rarest, whereas white, gray, and green are the most common.

Precious opal shows a variable interplay of internal colors, and though it is a mineraloid, it has an internal structure. At microscopic scales, precious opal is composed of silica spheres some 150 to 300 nm in diameter in a hexagonal or cubic close-packed lattice. It was shown by J. V. Sanders in the mid-1960s that these ordered silica spheres produce the internal colors by causing the interference and diffraction of light passing through the microstructure of the opal. The regularity of the sizes and the packing of these spheres determines the quality of precious opal. Where the distance between the regularly packed planes of spheres is around half the wavelength of a component of visible light, the light of that wavelength may be subject to diffraction from the grating created by the stacked planes. The colors that are observed are determined by the spacing between the planes and the orientation of planes with respect to the incident light. The process can be described by Bragg's law of diffraction.

Visible light cannot pass through large thicknesses of the opal. This is the basis of the optical band gap in a photonic crystal. The notion that opals are photonic crystals for visible light was expressed in 1995 by Vasily Astratov's group. In addition, microfractures may be filled with secondary silica and form thin lamellae inside the opal during solidification. The term opalescence is commonly used to describe this unique and beautiful phenomenon, which in gemology is termed play of color. In gemology, opalescence is applied to the hazy-milky-turbid sheen of common or potch opal which does not show a play of color. Opalescence is a form of adularescence.

For gemstone use, most opal is cut and polished to form a cabochon. "Solid" opal refers to polished stones consisting wholly of precious opal. Opals too thin to produce a "solid" may be combined with other materials to form attractive gems. An opal doublet consists of a relatively thin layer of precious opal, backed by a layer of dark-colored material, most commonly ironstone, dark or black common opal (potch), onyx, or obsidian. The darker backing emphasizes the play of color and results in a more attractive display than a lighter potch. An opal triplet is similar to a doublet but has a third layer, a domed cap of clear quartz or plastic on the top. The cap takes a high polish and acts as a protective layer for the opal. The top layer also acts as a magnifier, to emphasize the play of color of the opal beneath, which is often an inferior specimen or an extremely thin section of precious opal. Triplet opals tend to have a more artificial appearance and are not classed as precious gemstones. Jewelry applications of precious opal can be somewhat limited by opal's sensitivity to heat due primarily to its relatively high water content and predisposition to scratching. Combined with modern techniques of polishing, a doublet opal can produce a similar effect to solid black or boulder opal at a fraction of the price. Doublet opal also has the added benefit of having genuine opal as the top visible and touchable layer, unlike triplet opals.

Besides the gemstone varieties that show a play of color, the other kinds of common opal include the milk opal, milky bluish to greenish (which can sometimes be of gemstone quality); resin opal, which is honey-yellow with a resinous luster; wood opal, which is caused by the replacement of the organic material in wood with opal; menilite, which is brown or grey; hyalite, a colorless glass-clear opal sometimes called Muller's glass; geyserite, also called siliceous sinter, deposited around hot springs or geysers; and diatomaceous earth, the accumulations of diatom shells or tests. Common opal often displays a hazy-milky-turbid sheen from within the stone. In gemology, this optical effect is strictly defined as opalescence which is a form of adularescence.

Fire opal is a transparent to translucent opal, with warm body colors of yellow to orange to red. Although it does not usually show any play of color, occasionally a stone will exhibit bright green flashes. The most famous source of fire opals is the state of Querétaro in Mexico; these opals are commonly called Mexican fire opals. Fire opals that do not show a play of color are sometimes referred to as jelly opals. Mexican opals are sometimes cut in their rhyolitic host material if it is hard enough to allow cutting and polishing. This type of Mexican opal is referred to as a Cantera opal. Also, a type of opal from Mexico, referred to as Mexican water opal, is a colorless opal which exhibits either a bluish or golden internal sheen.

Girasol opal is a term sometimes mistakenly and improperly used to refer to fire opals, as well as a type of transparent to semitransparent type milky quartz from Madagascar which displays an asterism, or star effect when cut properly. However, the true girasol opal is a type of hyalite opal that exhibits a bluish glow or sheen that follows the light source around. It is not a play of color as seen in precious opal, but rather an effect from microscopic inclusions. It is also sometimes referred to as water opal, too, when it is from Mexico. The two most notable locations of this type of opal are Oregon and Mexico.[citation needed]

Peruvian opal (also called blue opal) is a semi-opaque to opaque blue-green stone found in Peru, which is often cut to include the matrix in the more opaque stones. It does not display a play of color. Blue opal also comes from Oregon in the Owyhee region, as well as from Nevada around the Virgin Valley.[citation needed]

Opal is also formed by diatoms. Diatoms are a form of algae that, when they die, often form layers at the bottoms of lakes, bays, or oceans. Their cell walls are made up of hydrated silicon dioxide which gives them structural coloration and therefore the appearance of tiny opals when viewed under a microscope. These cell walls or "tests" form the “grains” for the diatomaceous earth. This sedimentary rock is white, opaque, and chalky in texture. Diatomite has multiple industrial uses such as filtering or adsorbing since it has a fine particle size and very porous nature, and gardening to increase water absorption.

Opal was rare and very valuable in antiquity. In Europe, it was a gem prized by royalty. Until the opening of vast deposits in Australia in the 19th century the only known source was Červenica beyond the Roman frontier in Slovakia. Opal is the national gemstone of Australia.

Australian opal has often been cited as accounting for 95–97% of the world's supply of precious opal, with the state of South Australia accounting for 80% of the world's supply. Recent data suggests that the world supply of precious opal may have changed. In 2012, Ethiopian opal production was estimated to be 14,000 kg (31,000 lb) by the United States Geological Survey. USGS data from the same period (2012), reveals that Australian opal production to be $41 million. Because of the units of measurement, it is not possible to directly compare Australian and Ethiopian opal production, but these data and others suggest that the traditional percentages given for Australian opal production may be overstated. Yet, the validity of data in the USGS report appears to conflict with that of Laurs et al. [citation needed] and Mesfin,[citation needed] who estimated the 2012 Ethiopian opal output (from Wegal Tena) to be only 750 kg (1,650 lb).

The word 'opal' is adapted from the Latin term opalus, but the origin of this word is a matter of debate. However, most modern references suggest it is adapted from the Sanskrit word úpala.

References to the gem are made by Pliny the Elder. It is suggested to have been adapted from Ops, the wife of Saturn, and goddess of fertility. The portion of Saturnalia devoted to Ops was "Opalia", similar to opalus.

Another common claim that the term is adapted from the Ancient Greek word, opallios. This word has two meanings, one is related to "seeing" and forms the basis of the English words like "opaque"; the other is "other" as in "alias" and "alter". It is claimed that opalus combined these uses, meaning "to see a change in color". However, historians have noted the first appearances of opallios do not occur until after the Romans had taken over the Greek states in 180 BC and they had previously used the term paederos.

However, the argument for the Sanskrit origin is strong. The term first appears in Roman references around 250 BC, at a time when the opal was valued above all other gems. The opals were supplied by traders from the Bosporus, who claimed the gems were being supplied from India. Before this, the stone was referred to by a variety of names, but these fell from use after 250 BC.

In the Middle Ages, opal was considered a stone that could provide great luck because it was believed to possess all the virtues of each gemstone whose color was represented in the color spectrum of the opal. It was also said to grant invisibility if wrapped in a fresh bay leaf and held in the hand. Following the publication of Sir Walter Scott's Anne of Geierstein in 1829, opal acquired a less auspicious reputation. In Scott's novel, the Baroness of Arnheim wears an opal talisman with supernatural powers. When a drop of holy water falls on the talisman, the opal turns into a colorless stone and the Baroness dies soon thereafter. Due to the popularity of Scott's novel, people began to associate opals with bad luck and death. Within a year of the publishing of Scott's novel in April 1829, the sale of opals in Europe dropped by 50%, and remained low for the next 20 years or so.

Even as recently as the beginning of the 20th century, it was believed that when a Russian saw an opal among other goods offered for sale, he or she should not buy anything more, as the opal was believed to embody the evil eye.

Opal is considered the birthstone for people born in October.