Penalty shootout

A penalty shootout in association football is a way of deciding who wins match if both teams have scored the same number of goals.
If the score is a draw after 90 minutes, usually the teams will play an extra 30 minutes of extra time. If the score is still equal, then a penalty shootout takes place. Usually each team takes five penalties each, and the team who scores the most wins. If both teams are equal after these penalties, then each team will take one more penalty until one team is ahead.
Penalty shootouts are normally only used in cup matches, and not league matches. If nobody wins in a league match, both teams get one point for the draw. In a cup match often a winner in needed to go to the next round.
Many famous cup finals have been won by penalty shootouts, like the 2006 World Cup final, the 2005 UEFA Champions League final and the 1994 World Cup final.
Sources.
FIFA laws of the game