Lolicon, or Rorikon (ロリコン) is the Japanese (or Engrish) term for "Lolita complex" (derived from the novel Lolita), the sexual attraction to fictional and real underage girls.
It is used to refer to anime, manga, and other visual forms of art that contain sexual/erotic representations of underage girls, and also to people who are sexually attracted to fictional and real underage girls (and who are not themselves underage). Actual photographs or videos of underage children in sexual situations can be considered lolicon, but is usually simply called child pornography; lolicon is legal in Japan (so long as actual underage models are not used in the creation of the art), child pornography is not.
"Complex" is abbreviated as "con", rather than "com", because Japanese syllables can't end in an "m", but can end in a "n" (to oversimplify). Other foreign words with syllables ending in "m" are often transliterated in the same manner.
Generally speaking, lolicon involves girls older than 12 and younger than 16, which is mostly outside the clinical definition of pedophilia. Despite this, it is frequently accused of being similar to or a form of pedophilia, particularly by westerners. Those people who are "lolicon" are believed by some to have a tendency to act violently against children or to prefer sex with children to adults. Despite Japan producing most lolicon media, violence against children and teens are well below that of those countries with explicit laws prohibiting similar publications. Some characters younger than 12, notably Sakura Kinomoto from Cardcaptor Sakura, are sometimes also considered to appeal to lolicon; this is more pronounced in fan-produced work about such characters, like dojinshi, than in "mainstream" publications.
Lolicon is a frequent subject of scholarly articles on sexuality in Japan, and is often suggested to exist in Japan for the same reasons that adult women in high-school uniforms are considered attractive, and enjo kosai is popular. Conversely, it is suggested that lolicon does not exist in the west because of traditional western views on the sexuality of minors. Despite stereotypes, however, neither culture has homogeneous views; there are many Japanese staunchly opposed to lolicon, and there are many westerners that would have no objection to it. Defenders of lolicon say that fictional material does not adversely affect children, and may in some cases help to relieve the sexual tension of actual pedophiles; opponents often say that the existence of fictional material encourages the viewing of children as sex objects.
Shota-con is the underage-boy equivalent of lolicon.