The first official flag of the Confederate States of America. Flown over confederate and state buildings, but not usually carried into battle (see the Confederate Battle Flag) because the pattern and colors of this flag did not distinguish it from the Stars and Stripes of the Union.
The most catastrophic consequence of the similarity of flags may have been the death of Stonewall Jackson whose party was carrying this flag when they were attacked in error by Southern troops at the Battle of Chancellorsville.
The flag had two horizontal red stripes separated by a white stripe (top third red, middle third white, bottom third red). Superimosed in the top left corner (the Canton: 1/2 height, 1/3 width) was a blue square with seven or more white stars arranged in a circle. The stars represented the seven original Confederate states, plus more to represent later states or sympathetic states. A 12 star variation was used by Nathan Bedford Forest, who swore not to include the star for Georgia, "as long as a Yankee remains on Georgia's soil." Also of interest, the Cherokee Brigade's flag had 13 white stars in a circle around 5 red ones for the "five civilized nations" - the five native american tribes that joined the Confederacy.
See Flags of the Confederacy and also rebel flag.