In music, an altered chord, an example of alteration, is a chord with one or more notes from the diatonic scale replaced by a neighboring pitch in the chromatic scale. Thus the note must be a chord tone. According to the broadest definition any chord with a nondiatonic chord tone is an altered chord, while the simplest use of altered chords is the use of "borrowed" chords—borrowed from the parallel key and the most common is the use of secondary dominants.
Alteration, an example of chromaticism, is compositional and/or improvisational technique for creating greater harmonic interest and variety. A triad has three pitches (by definition), and if each one of which may be raised or lowered a semitone (or not), this allows the production of 33=27 chords, including the original. Alteration is also an analytical technique for explaining why chromaticism occurs in chord progressions by assuming a diatonic origin and, to some extant, function.
For example, altered notes may be used as leading tones to emphasize their diatonic neighbors. Contrast with chord extension: "Whereas chord extension generally involves adding notes that are logically implied, chord alteration involves changing some of the typical notes. This is usually done on dominant chords, and the four alterations that are commonly used are the ♭5, ♯5, ♭9 and ♯9. Using one (or more) of these notes in a resolving dominant chord greatly increases the bite in the chord and therefore the power of the resolution." "The more tension, the more powerful the resolution… we can pile that tension on to make the resolution really spectacular." The five most common types of altered dominants are: V+, V+7 (both raised fifths), V♭5, V7♭5 (both lowered fifths), and Vø7 (lowered fifth and third).