WPML is a WordPress plugin that can turn any WordPress or WordPressMU site into a full featured multilingual content management system. WPMU can do this without any hacks and without breaking anything.

It can be configured to serve different subdomains or different sites in folders. Each blog in the WPMU install will serve a different language. Each blog will run in a single language and function as a standard WordPress blog.

You will be able to select the language for different pages, posts, categories and tags. Add translations to everything. Run your site from a single domain with language folders (example.com, example.com/es, example.com/de) or from different domains. You can also select your admin language.

Pricing: Free
Requirements: WordPress 2.6+ and requires PHP5.
Source: http://wpml.org/