Active Noise Cancellation (ANC) uses microphones on the outside and/or inside of headphone earcups to capture ambient noise. A processor generates an inverted 'anti-noise' wave that cancels the original noise through destructive interference — when the two waves meet at your eardrum, they sum to near-silence.
ANC is most effective at cancelling constant, low-frequency noise: airplane engines, train rumble, HVAC systems, road noise. It is least effective against sudden, high-frequency sounds: human speech, dog barks, door slams. The best ANC headphones (Sony WH-1000XM5, Bose QC Ultra) can reduce ambient noise by 20–35 dB depending on frequency.
There are three types: feedforward (mic outside earcup, best for mid-frequencies), feedback (mic inside earcup, best for low frequencies), and hybrid (both, best overall). Most premium headphones use hybrid ANC. See 'Bluetooth Codec' for how wireless transmission quality affects ANC headphone performance.