Shikai is the second form of a Soul Reaper's Zanpakuto. It's initiated by calling out the name of the sword.
The Shikai is the second state of a Shinigami's zanpakutō, to be able to activate this form, the wielder must communicate with the living spirit withing their zanpakutō and learn the spirits name. Learning Shikai is a mark to show ones control of a zanpakutō, many higher ranks such as Seated Officers and Lietenants require to have Shikai to earn them the rank.
Once a shikai is activated, the zanpakutō will change form, allowing unique and special abilities which vary from zanpakutō.