Agnihotra in Hinduism is an ancient fire sacrifice or yajna
dedicated to Agni, the Hindu fire god. In the Agnihotra ritual a small fire is
made with dried cow-dung cakes. Some grains of rice and ghee (clarified
unsalted butter) are offered into the fire exactly at sunrise and sunset to the
accompaniment of two simple mantras. The offering is made to three fires - garhapatya, ahavaniya and dakshina. Only the head of the family who has installed three fires after the agni-adhana ritual (of kindling fire by the friction of two wooden sticks) is eligible to perform agnihotra.
After agnihotra, either all the three fires are kept aglow in the house by the performer and his spouse throughout their life, or garhapatya (the domestic fire) is kept burning, and the other two are lit from it at each agnihotra performance.
As per the Mahabharata, it is the best Vedic yajna. It is simple Vedic ritual to be performed daily by the head of the family and his spouse.
There is also an internal Agnihotra yajna which is known as
prana agnihotra – it is internal purification through prana or breath.
The ritual of offering food to the vital airs, prana agnihotra, is another simplified form of agnihotra.
Performing the yajna is considered highly meritorious and it
is believed that it leads to a life in Pritiyana – the realm of ancestors.