A concept especially associated with the model of generative phonology espoused by Chomksy & Halle. It is the form of a word or morpheme which is recorded in the lexicon and which is the input to the phonological component of a grammar. A simple example is the regular plural morpheme which occurs in three distinct surface forms (the forms actually produced by the speaker): z as in dogs, s as in cats, and ɪz as in horses. There are good arguments for positing a single underlying form z for the morpheme. This is then converted into the correct surface form by phonological rules which adjust the voicing and insert the vowel in appropriate environments.
Chomsky N. & Halle M. (1968) The sound pattern of English. New York: Harper & Row.