Otaku Dictionary: Anime

Noun
1) A style of Japanese cartoons. Important characteristics include large eyes on the females (and sometimes the males, too, depending on the genre), and uncommon hair styles/colors. The art overall just tends to be prettier, too. Unlike cartoons in the West, anime is watched by everyone, and there are several genres for it. The name comes from the Japanese pronunciation of animation.
Most anime originates as a manga, but it can also originate as a light novel (Haruhi, DRRR), video game, or even recently, series of vocaloid songs (Kagerou Daze)
2) An abbreviation of animation, can refer to any type of cartoons, Japanese or not.

Note: You read manga, you watch anime