The DSM is the Diagnostic And Statistical Manual Of Mental Disorders. It is published by the American Psychiatric Association (APA). The DSM is the official legal handbook of what is and is not a mental disorder. Insurance companies will only pay claims for official DSM diagnoses and the DSM is also the official arbitrator in a court of law.
The current issue of the DSM is the DSM-IV-TR, in other words, the Diagnostic And Statistical Manual Of Mental Disorders, Fourth Edition, Text Revision. The first edition of the DSM was published in 1952. The DSM-II was published in 1968. The DSM-III came out in 1980, and a revised version, the DSM-III-R came out in 1987. In 1994 the DSM-IV was published and the DSM-IV-TR came out in the year 2000.
Since it is difficult to define objective criteria for what a mental disorder is, the contents of the DSM are the result of a majority vote of the APA. This has led to some interesting and abrupt changes in the content of the DSM over the years. Until 1973 homosexuality was a mental disorder according to the DSM. In 1973 the APA voted that homosexuality was no longer a mental illness.