Iaido

Iaido means "the way of mental presence and immediate reaction." - approximately.

Iaido ia is a Japanese sword art typicaly associated with smooth, controlled movements of drawing the sword from the saya, striking an imaginary opponent, removing blood from the blade, and then replacing the sword back in the saya. An unsharpened sword called an Iaito is typically used. However, advanced Iaido practitioners may use a sharp sword as well.

The creation of Iaido is generally credited with Hayashizaki Jinsuke (Minamoto no) Shigenobu in the early 16th century. However, around a century before his birth, a similar sword art known as iaijutsu had been developed by Iizasa Ienao, the founder of the Tenshin Shoden Katori Shinto Ryu.

Iaido should not be confused with Kendo or Kenjutsu:

Kendo teaching does not teach drawing and re-sheathing techniques. A flexible sword called a shinai is used, and there is no saya (scabbard) (link). Kendo is practiced with a partner in full contact training or in kata practice. Iaido is typically a solo art, or sometimes with a partner (but never full contact like Kendo).
Kenjutsu is typically anythign that is combat related for the Japanese sword. This involves the cutting of real targets, as well as a whole compliment of strategy, footwork, and technique.

The primary emphasis in Iaido is on the psychological state of being present. The secondary emphasis is on drawing the sword and responding to the sudden attack as quickly as possible. Starting positions can be from a combative posture or from an everyday sitting or standing position.