A "Grand Jury" is a group of citizens that are selected and sworn in by a court, somewhat like jurors that are chosen to serve on a regular trial jury. Grand Juries are usually requested to be empaneled by a local prosecutor such as the District Attorney (county level) or Attorneys General (state and federal level). These requests are then acted upon by the courts. In many jurisdictions, others, such as a Mayor, Governor or even judges can also trigger a Grand Jury being formed.
The function of the grand jury is to investigate possible criminal violations of the laws and to return indictments against culpable corporations and individuals where there is probable cause to believe that a violation has occurred. In performing this function, "the grand jury is to inquire into all information that might possibly bear on its investigation until it has identified an offense or has satisfied itself that none has occurred." 
Grand juries differ from trial juries in several ways. In the federal system, a grand jury can work for three years, although it doesn't have to sit that long. The court that swears in a new grand jury can extend its term in 6-month increments, for a total of 36 months, but it might be finished with its work in just a few months. State grand juries sit for varying terms: Depending on the state, a particular grand jury may sit for a month, six months, or even a year.
At local (county) level, the Grand Jury investigates the operations of governmental programs of the County, cities and special districts. A new Grand Jury is chosen each year. Members are nominated by Superior Court Judges to serve one-year terms. A grand jury typically reviews and evaluates procedures, methods and systems utilized by government to determine whether they can be made more efficient and effective. It may examine any aspect of county government and city government, including special legislative districts and joint powers agencies, to ensure that the best interests of citizens are being served. The grand jury may also investigate possible wrongdoing because of written complaints brought to it by the public.
A grand jury functions lawfully only as a body; no individual grand juror acting alone has any power or authority. Meetings of the jury are not open to the public, and discussions and voting are required by law to be kept private and confidential.
A grand jury may conduct hearings to determine whether there is sufficient evidence to bring an indictment charging a person with a public offense; however, the district attorney usually calls for impanelment of separate juries drawn from the regular trial jury pool to bring criminal indictments. The grand jury has the power of subpoena. Grand juries don't decide if someone is guilty of criminal wrongdoing charges that have been brought against them. Grand juries listen to evidence and decide if someone SHOULD be charged with a crime.  
Federal Grand Juries
The grand jury cannot indict without the signature of the prosecutor. As stated in United States v. Cox, 342 F.2d 167, 171 (5th Cir.), cert. denied, 381 U.S. 935 (1965):
"The role of the grand jury is restricted to a finding as to whether or not there is probable cause to believe that an offense has been committed. The discretionary power of the attorney for the United States in determining whether a prosecution shall be commenced or maintained may well depend upon matters of policy wholly apart from any question of probable cause. . . . It follows, as an incident of the constitutional separation of powers, that the courts are not to interfere with the free exercise of the discretionary powers of the attorneys of the United States in their control over criminal prosecutions. The provision of Rule 7, requiring the signing of the indictment by the attorney for the government, is a recognition of the power of government counsel to permit or not to permit the bringing of an indictment. If the attorney refuses to sign, as he has the discretionary power of doing, we conclude that there is no valid indictment."
The origins of grand juries can be traced to the time of the Norman Conquest of England. Generally, historians agree that the inquest of Clarendon in 1164 was the genesis of our present grand jury system. In North America, the Massachusetts Bay Colony impaneled the first grand jury in 1635 to consider cases of murder, robbery and wife beating. By the beginning of American independence, the grand jury had become an indispensable adjunct of government. The grand juries proposed new laws, protested against abuses in government, and wielded tremendous authority in their power to determine who should and should not face trial.