Now very close to becoming reality - The Invisibility Cloak
Researchers at the University of California in Berkeley have developed a material that can bend light around 3D objects making them “disappear”. Light is neither absorbed nor reflected by the objects, passing “like water flowing around a rock,” according to the researchers. As a result, only the light from behind the objects can be seen.
See how the light rays bend around the centre sphere and continue along their original pathway?

This BBC site explains the idea well. I also found the news clip below from msnbc really easy to understand.
