The liquid that fills the inside of the entry plug. Viscous in nature and having a blood-like odor, when charged by electricity its molecular arrangement is altered, allowing L.C.L to perform a number of functions such as mentally linking the pilot and the Eva, supplying oxygen, and providing both physical and mental protection to the pilot. This same L.C.L also fills the lowest level of Terminal Dogma where Lilith is kept. Various interpretations have been circulated such as that "L.C.L" is the abbreviation of "Link Connected Liquid", but what it appears to be is the actual "soup of life".

(Translator's Note: The Evangelion: Death and Rebirth Movie Program (Sp. Ed.) states clearly that "L.C.L" is not the abbreviation of "Link Connected Liquid".)

Source: The End of Evangelion : Glossary contained within The End of Evangelion - Theatrical Program.

In response to Regulus's conclusion: I think LCL originated from Lilith, though I don't know if blood is the appropriate term. It clearly has some of the properties of blood (in particular the smell), but it's doesn't look like blood, and there is a whole sea of it there down in terminal dogma, so I don't think it is vital to keep Lilith "alive". Of course this begs the question of how Lilith exists without a soul (her soul is in Rei), but that's such a big topic I don't think it's a good idea to go into here (msg me if anyone wants to discuss it).