This article is from the Comics Misc FAQ, by with numerous contributions by FAQcis Uy firstname.lastname@example.org others.
To retroactively change the continuity of a character or title. Coined by
Damian Cugley, retcon is a shortening or verbification of "retroactive
continuity". Its first known use was in the letter column of All-Star
Squardron #18, where Roy Thomas wrote that he heard it at a convention.
Originally, "retcon" meant that the interpretation of "facts" from earlier
stories is changed, but the facts themselves are preserved. For example,
Alan Moore took Swamp Thing, previously thought to be a man transformed into
a plant creature, and with minimal changes to previous stories, made Swamp
Thing a "plant elemental" with a dead man's memories.
These days, retcon has come to mean changes to history itself, so that
something that had existed in the fictional universe, not only doesn't exist
now, but NEVER HAS existed. For example, Batman caught his parents' killer,
Joe Chill, years ago. But the Zero Hour story retconned it, so he has never
found the killer.