Infrastructure as a Service (IaaS) is the next step down from Platform as a Service (PaaS) and two steps down from Software as a Service (SaaS) in the Cloud Computing Stack. Instead of ready-made applications or services, developement tools, databases, etc. IaaS provides the underlying operating systems, security, networking, and servers for developing such applications, services, and for deploying development tools, databases, etc.
An IaaS provider provides policy-based services and is responsible for housing, operating and maintaining the infrastructure equipment it provides for a client. Clients usually pay on a per-use or utility computing basis.