A Supplemental Type Certificate (STC) is an FAA approved major modification or repair to an existing type certified aircraft, engine or propeller. As it adds to the existing type certificate, it is deemed 'supplemental'.
Due to their inherent criticality, all changes to the design of an aircraft are required to be approved in some form. How this is achieved will vary from country to country. Generally modifications and repairs deemed to be 'minor' such as the installation of a radio or the repair to upholstery may be approved by the aircraft mechanic or maintenance engineer. However, larger changes such as changing the type of engine or increasing the maximum weight are deemed 'major' and required formal approval from the NAA or NAA approved person or organization.
There are a number of methods to obtain approval for a major modification or repair to a type certified aircraft:
A "Service Bulletin (SB)" issued by the manufacturer,
A "Field Repair" such as via an FAA Form 337,
A "Local Approval" also known as an Engineering Order (EO), or
A Supplemental (or Supplementary) Type Certificate (STC).
An STC has the following advantages over other forms of modification or repair approval:
It may be developed and owned by a person other than the aircraft or equipment manufacturer,
It is essentially unlimited in the scope of the modification.
It may cover a single aircraft (serial number) or many types of aircraft.