It's the name given to an unknown predatory animal whose actions were first reported in Puerto Rico. Live stock throughout Puerto Rico, mostly goats, were found dead, drained of blood, with a distinguishing puncture would. The media not having any real explanation called it El Chupacabra, which stands for the "goat sucker".
Though it's a relatively new urban legend, it's quickly gained in popularity and now ranks with Big Foot, The Abominable Snowman and Nessie, the Lochness Monster.
Some people speculate it's aliens, others think government genetic experiment gone bad, and many believe it's a vampire like creature from hell. I like the scavenger/insect theory. Really though, I have no opinion either way, what surprises me more in the drive people have to find the truth.
The study of unknown animals is called cryptozoology. Note, you can't get a degree in cryptozoology, but it's amazing how many people are into it. I guess it's a testimonial of our human nature to find the truth.