In Hinduism and Buddhism, nirvana refers to the liberation of the soul from the cycle of birth, death, and rebirth as governed by karma. The Sanskrit word for this liberation is moksha, and nirvana is the peace of mind that accompanies the liberation. You can find out more in this Wikipedia article: Nirvana.
By metaphorical extension, it has come to refer in English to a state of perfect happiness, a kind of paradise or other idyllic existence.