Disarm is a warrior and Mob ability that removes the target's main hand weapon for a short time. This has the effect of slightly lowering a mob's damage, but usually shows a greater effect against players.
[Improved Disarm] reduces the cooldown of the Disarm ability as well as increasing damage taken by the disarmed target.
Counters
Disarm-resistance mechanics were changed in Patch 2.3.0. Previously, a number of items and some talents provided immunity to disarm. These have all been changed to reducing the duration of disarm effects by 50% (or 25% per talent point in the case of the Warrior talent Weapon Mastery).
A [Steel Weapon Chain] or [Adamantite Weapon Chain] can be attached to a melee weapon. These will appear as a small white spark spinning around the weapon. They are considered permanent item augments, and attaching one will replace any other permanent augments currently on the weapon (including enchants).
Certain items (such as [Death Grips]) have this same ability without needing to be enchanted.
Tips and Tactics
As stated above, you will typically see the greatest effect when used against melee players.
Disarm is highly useful against mobs that wield weapons, which almost strictly means humanoids and demons. The damage reduction is marked, as much as 50-70%. For soloing, the cooldown is short enough that you can use it on each mob. For grouping, it can be used in tougher battles to nullify an attacker for 10 seconds while concentrating on another.
Disarming a Mob will earn you its undying hatred; it will get a lot of aggro on you and is likely to stay on you for the duration of the fight (provided that nobody else does anything drastic to get its attention).
Disarmed hunters cannot use [Wing Clip] until they get their weapon back. However, being disarmed does not prevent them from using [Scatter Shot] or setting a trap, so it is better to use [Hamstring] on the initial [Charge].
Using this against a Warrior or a Rogue will be very useful, since most of thier abilites need a melee weapon, but against a Mage it is waste of GCD and rage. Since mages dont use thier staffs nearly at all, that one [Mortal Strike] will be much more useful than Disarm.
Patch changes
Patch 3.1.0 (2009-04-14): This ability now disarms ranged weapons as well.
[Defensive Stance]
[Improved Disarm]
[Death Grips]) have this same ability without needing to be enchanted.
[Wing Clip] until they get their weapon back. However, being disarmed does not prevent them from using 
