ATA over Ethernet (AoE) is an open source network protocol designed to connect storage devices and servers in a storage area network (SAN). ATA (Advanced Technology Attachment) is a standard interface for communication between storage devices; it is known in the computer industry as Integrated Drive Electronics, or IDE. In AoE, the ATA commands are transported directly over Ethernet. That makes AoE an inexpensive alternative to Fibre Channel SANs, which require costly dedicated networks.
AoE is also a simple alternative to iSCSI SANs, which must use significant processing power and TCP/IP offload engines to administer commands. In addition, because AoE is not routable, storage devices do not require IP addresses. Administrators can create Ethernet subnets that connect servers and their storage devices exclusively to greatly reduce security risks.
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Definition courtesy of WhatIs.com.