Verification: Have we built the software right? (i.e., does it match the specification).
Validation: Have we built the right software? (i.e., is this what the customer wants).
The terms verification and validation are commonly used interchangeably in the industry; it is also common to see these two terms incorrectly defined. According to the IEEE Standard Glossary of Software Engineering Terminology:
Verification is the process of evaluating a system or component to determine whether the products of a given development phase satisfy the conditions imposed at the start of that phase.
Validation is the process of evaluating a system or component during or at the end of the development process to determine whether it satisfies specified requirements.