Pirate radio is broadcasting outside of the rules laid down by the Federal Communications Commission (FCC). Pirate radio usually occurs on the FM band because that is where the most receivers are.
Under Part 15 of the FCC rules, you can legally broadcast on the FM band if you broadcast using less that 100 milliwatts of output power and and antenna less than 3' long. In contrast, commercial FM broadcasters are required to broadcast using at least 100 watts of output power. 100 milliwatts will give your signal an effective range of less than one mile.
You can build the gear needed to transmit pirate radio, or you can buy much of what you need from Radio Free Berkeley. An entire pirate radio broadcasting system can be put together for well under $1,000.
For more information on pirate radio, visit Radio Free Berkeley.