Implied Odds is an advanced pot odds concept that looks beyond the immediate pot odds in determining the profitability of a call.  When calculating implied odds, you estimate how much money you can win on future betting rounds if you hit your draw.

For example, if you have a flush draw in a $50 pot and your opponent bets $25, you're only getting 3:1 on a 4:1 draw so it would be unprofitable to call this bet.  This is where your implied odds come into play.  Let's say you estimate that you can get the opponent to call a $40 bet on the river if you hit your draw.

Now all you do is add that $40 bet to the pot odds you calculated in the first place.  So even though your immediate pot odds are still 3:1, your implied odds (taking that future bet into consideration) are about 4.5:1 which is enough to call with a flush draw.

(Note - if you're confused about where I'm coming up with these ratios, read my pot odds article.  In that article I break it all down and explain how to come up with these ratios.)

The biggest problem with the implied odds concept is that it's based on an estimation.  Many new players get in trouble here by being overly optimistic in their implied odds estimations.

Before you use your implied odds as justification for chasing a draw, make sure you have a good reason to believe your opponent has a hand worth calling with. Sometimes people are bluffing, other times their hands just aren't strong enough to call much of a bet on the river. It's all too easy to fall into that wishful thinking trap so be realistic in your estimations. 

Poker Odds Chart