Transport Layer protocols, such as TCP, UDP, SCTP, and DCCP, specify a source and destination port number in their packet headers. A port number is a 16-bit unsigned integer, thus ranging from 0 to 65535. A process associates with a particular port (known as binding) to send and receive data, meaning that it will listen for incoming packets whose destination port number and IP destination address match that port, and/or send outgoing packets whose source port number is set to that port. Processes may bind to multiple ports.

Applications implementing common services will normally listen on specific port numbers which are defined by convention for use with the given protocol — see list of TCP and UDP port numbers. Typically, these will be low port numbers. In many Unix-like operating systems only processes owned by the superuser can create ports with numbers from 0 to 1023. This is for security purposes to prevent untrusted processes from providing system services. Conversely, the client end of a connection will typically use a high port number allocated for short term use (ephemeral port).

Because the port number is contained in the packet header, it is readily interpreted not only by the sending and receiving computers, but also by other components of the networking infrastructure. In particular, firewalls are commonly configured to differentiate between packets depending on their source and/or destination port numbers. Port forwarding is an example application of this.

Because different services commonly listen on different port numbers, the practice of attempting to connect in sequence to a wide range of services on a single computer is commonly known as port scanning.

An example for the use of ports is the Internet mail system (e-mail). A server used for sending and receiving e-mail provides both an SMTP service (for sending) and a POP3 service (for receiving). These are handled by different server processes, and the port number is used to determine which data is associated with which process. By convention, the SMTP server listens on port 25, while POP3 listens on port 110.
The concept of ports can be readily explained with an analogy: think of IP addresses as the street address of an apartment building, and the port number as the number of a particular apartment within that building. If a letter (a data packet) is sent to the apartment building (IP) without an apartment number (port number) on it, then nobody knows whom (which service) it is intended for. In order for the delivery to be successful, the sender needs to include an apartment number along with the address to ensure the letter gets to the right domicile.