Stu posted this yesterday as an answer, and is full of good links and info on the topic. Definately good enough to keep.
Carb cycling means to alternate between periods of low carbs and periods of high carbs. The idea is to be in a calorie surplus most of the time and a calorie deficit part of the time. While you are in surplus your body will build muscle and while in deficit it will burn fat.
There are various strategies to do this:
http://www.t-nation.com/findArticle.do? ... 5-180-diet
This one is the simplest:
You can also follow a paleo or evolutionary type diet for long term stable fat loss and muscle gain.