The MAX232 is an IC, first created in 1987 by Maxim Integrated Products, that converts signals from an RS-232 serial port to signals suitable for use in TTL compatible digital logic circuits. The MAX232 is a dual driver/receiver and typically converts the RX, TX, CTS and RTS signals.
The drivers provide RS-232 voltage level outputs (approx. ± 7.5 V) from a single + 5 V supply via on-chip charge pumps and external capacitors. This makes it useful for implementing RS-232 in devices that otherwise do not need any voltages outside the 0 V to + 5 V range, as power supply design does not need to be made more complicated just for driving the RS-232 in this case.
The later MAX232A is backwards compatible with the original MAX232 but may operate at higher baud rates and can use smaller external capacitors – 0.1 μF in place of the 1.0 μF capacitors used with the original device. The newer MAX3232 is also backwards compatible, but operates at a broader voltage range, from 3 to 5.5 V. 
Pin-to-pin compatible versions from other manufacturers are ICL232, ST232, ADM232 and HIN232.
It is helpful to understand what occurs to the voltage levels. When a MAX232 IC receives a TTL level to convert, it changes a TTL logic 0 to between +3 and +15 V, and changes TTL logic 1 to between -3 to -15 V, and vice versa for converting from RS232 to TTL. This can be confusing when you realize that the RS232 data transmission voltages at a certain logic state are opposite from the RS232 control line voltages at the same logic state. To clarify the matter, see the table below. For more information, see RS-232 voltage levels.
|RS232 line type and logic level||RS232 voltage||TTL voltage to/from MAX232|
|Data transmission (Rx/Tx) logic 0||+3 V to +15 V||0 V|
|Data transmission (Rx/Tx) logic 1||-3 V to -15 V||5 V|
|Control signals (RTS/CTS/DTR/DSR) logic 0||-3 V to -15 V||5 V|
|Control signals (RTS/CTS/DTR/DSR) logic 1||+3 V to +15 V||0 V|
The MAX232(A) has two receivers that convert from RS-232 to TTL voltage levels, and two drivers that convert from TTL logic to RS-232 voltage levels. As a result, only two out of all RS-232 signals can be converted in each direction. Typically, the first driver/receiver pair of the MAX232 is used for TX and RX signals, and the second one for CTS and RTS signals.
There are not enough drivers/receivers in the MAX232 to also connect the DTR, DSR, and DCD signals. Usually, these signals can be omitted when, for example, communicating with a PC's serial interface. If the DTE really requires these signals, either a second MAX232 is needed, or some other IC from the MAX232 family can be used. Also, it is possible to directly wire DTR (DE-9 pin #4) to DSR (DE-9 pin #6) without going through any circuitry, which provides an automatic (brain-dead) DSR acknowledgment of the incoming DTR signal.
|Wikimedia Commons has media related to MAX232.|
|The Wikibook Serial Programming has a page on the topic of: MAX232 Driver Receiver|