An IP phone uses Voice over IP technologies allowing telephone calls to be made over an IP network such as the internet instead of the ordinary PSTN system. Calls can traverse the Internet, or a private IP Network such as that of a company. The phones use control protocols such as Session Initiation Protocol, Skinny Client Control Protocol or one of various proprietary protocols such as that used by Skype. IP phones can be simple software-based Softphones or purpose-built hardware devices that appear much like an ordinary telephone or a cordless phone. Ordinary PSTN phones are used as IP phones with analog telephony adapters (ATA).

It may have many features an analog phone doesn't support, such as e-mail-like IDs for contacts that may be easier to remember than names or phone numbers.