Java supports exception handling, allowing developers to manage runtime errors. Exceptions are events that disrupt the normal execution of a program, triggered by issues like invalid input, missing files, or out-of-memory conditions. Java categorizes exceptions into two types: checked and unchecked. Checked exceptions are caught at compile time, such as IOException and SQLException, while unchecked exceptions, like NullPointerException and ArithmeticException, occur at runtime. Proper handling of these exceptions using techniques like try-catch blocks and the throw keyword ensures smoother program execution and helps maintain robust applications.