In Hebrew, each letter possesses a numerical value. Gematria is the calculation of the numerical equivalence of letters, words, or phrases, and, on that basis, gaining, insight into interrelation of different concepts and exploring the interrelationship between words and ideas.
Here is a basic introduction to Gematria that discusses different systems for identifying the numerical equivalence of individual letters, how these letters can be calculated according to the implicit word-value of their names.
The assumption behind this technique is that numerical equivalence is not coincidental. Since the world was created through God's "speech," each letter represents a different creative force. Thus, the numerical equivalence of two words reveals an internal connection between the creative potentials of each one. (see Tanya, Sha'ar HaYichud VeHaEmunah, chapters 1 and 12.)
There are four ways to calculate equivalence of individual letters: