"Soundflower is a Mac OS X (10.2 and later) system extension that allows applications to pass audio to other applications. Soundflower is easy to use, it simply presents itself as an audio device, allowing any audio application to send and receive audio with no other support needed. Soundflower is free, open-source, and runs on Mac Intel and PPC computers."

Read more at http://cycling74.com/products/soundflower/