The technology is based on sheets of hexagonal 'pixels' that are able to change temperature very quickly.
On-board cameras collect images of the vehicle's background and display that infra-red image onto the vehicle panels, making it appear to vanish.
http://news.sky.com/home/technology/article/16063257 -via Ace of Spades HQ | Photo (unrelated) via Flickr user Håkan Dahlström used under Creative Commons license
http://science.howstuffworks.com/invisible-tank.htm
http://www.staticbrain.com/archive/military-tests-invisible-tanks-and-soldiers/