An intercooler is a component that reduces the temperature of air before the engine uses it. It is similar in appearance to a radiator or an oil cooler, and is often mounted in the same area behind the grille. It is made from metal (which is very good at transferring heat, known as thermal transfer) and is designed to let air flow through many tiny spaces between the metal. The high amount of surface area allows more of the air to contribute to the cooling effect.
How an Intercooler Improves an Engine's Horsepower
As you may recall from science class, when most things heat up, they expand to varying degrees, and air is no exception. If you cool the air before it enters the engine, there will be more of it (not visibly, but it is atomically more dense) in the combustion chamber, which allows the engine to use more fuel, generating more power. Intercoolers are generally only found on turbocharged or supercharged engines, because these generate heat as they force in more air, so the intercooler is more effective in those conditions.
The Intercooler's Location
The intercooler is typically located closer to the grille opening than the radiator, because it doesn't change the outside air temperature much as it passes through it, and the slight change isn't enough to notably change the radiator's cooling properties. If the radiator was the first thing the air passed through, it would heat up the air quite a lot, and defeat the purpose of having the intercooler at all.
Differences Between Intercoolers & Radiators
Radiators are quite similar on the outside, and even on the inside. However, it's what flows through the inside of them (to get cooled down) that makes the difference. Radiators have coolant fluid flowing through them in most cases, and intercoolers are usually letting intake air flow directly through them. There are some liquid intercoolers, but they are rarely equipped to automobiles.
How to Make an Intercooler
In the video above, the Mighty Car Mods team explains how to make a custom one-off Intercooler.
Images courtesy of Wikimedia Commons.