Also known as Wrapper.

Intend

Dynamically attach responsabilities to an object.

It provides a flexible alternative to subclassing for extending functionality.

You should use the Decorator pattern in the following cases :

You want to provide individual objects (not an entire class) with a new behaviour.
You want to add responsabilities dynamically and transparently.
When the alternative (extension by subclassing) is impractical :
- When it would produce an explosion of subclasses to support every combination.
- The class definition is hidden or unavailable for subclassing.

How it's done

Participants

Component : The interface for objects that can have responsabilities dynamically added.
ConcreteComponent : The objects to which responsabilities can be added.
Decorator : Defines an interface that conforms to Component's interface. Maintain a reference to a Component object (wrappee).
ConcreteDecorator : The object that adds responsabilities to ConcreteComponent.

How to implement

Create an interface and declare the methods common to both the primary Component and the optional layers.
Create your ConcreteComponent class with its base behaviour.
Create your Decorator class with a field storing a reference to the wrapped object (Your Component). The Decorator will delegate all the work (i.e. except for the additional responsabilities) to the wrapped object.
Create your ConcreteDecorator and implement the additional responsabilities before or after the call to the wrappee behaviour.

Note : The Client can then create and compose ConcreteDecorators in the way he needs.

Note : UML class diagram taken from here

Pros

Extend an object's behaviour without subclassing.
Add responsabilities at runtime.
Combine behaviours (decorators composition) to suit your needs.
Single responsability principle : Divide monolithic classes into many classes with unique responsabilities.

Cons

It is hard to remove a decorator once it has been added.
Order : It might be difficult to implement decorators in a way they are order-independant.

Here are some usefull ressources :