Karma means "intentional action" and refers to the universal law of cause and effect. Karma is created not only by physical action but also by thoughts and words.
Just as action causes reaction, karma causes effects that come back to the original actor. Karma also tends to generate more karma that reaches out in all directions. We bear the consequences of the karma we create, but everyone around us is affected by our intentional acts as well, just as we are affected by theirs.
Buddhists do not think of karma as "destiny" or as some kind of cosmic retribution system. Although the fruits of "good" karma might be pleasant and beneficial, all karma keeps one entangled in the cycle of death and rebirth.
Actions free from desire, hate and delusion do not create karma. The enlightened being ceases to create karma and thus is liberated from (re)birth.
"I am the owner of my karma .
I inherit my karma.
I am born of my karma.
I am related to my karma.
I live supported by my karma.
Whatever karma I create, whether good or evil, that I shall inherit."
The Buddha, Anguttara Nikaya - Upajjhatthana Sutta http://www.viewonbuddhism.org/karma.html#2
“Sentient beings, self and others, enemies and dear ones—all are made by thoughts. It is like seeing a rope and mistaking it for a snake. When we think that the rope is a snake, we are scared, but once we see that we are looking at a rope, our fear dissipates. We have been deluded by our thoughts. Likewise, mentally fabricating self and others, we generate attachment and aversion.” ~Dilgo Khyentse Rinpoche