Historical note: This page describes the Python license used for Python versions up to and including Python 1.6a2. CNRI released Python 1.6b1 and the final Python 1.6 release under a different license, which is open source compliant, but not compatible with the GPL (the only incompatibility being the inclusion of a choice-of-law clause). More recent PSF releases, in particular 2.0.1, 2.1.1, and all releases since then, are GPL-compatible.
Most Python sources and binaries are distributed under the following copyright. A few files have a different copyright owner, but otherwise the notice is similar.
The gist of it is that Python is absolutely free, even for commercial use (including resale). There is no GNU-like "copyleft" restriction.
A clarification: some very picky lawyers are worried that the notice doesn't explicitly grant permission to distribute modified copies (even though it grants permission to copy, modify, and distribute). This can be considered an oversight in the notice; we have no intention to limit distribution of modified copies (that otherwise play by the rules). Similarly, the words "without fee" are to be read connected to "permission": permission is granted without fee. We are in the process of revising the notice to clarify it, but this is a slow process.
Another clarification: the limitation of the copyright to 1991-1995 in the notice is not a mistake, but rather a deliberate decision. Copyright applies regardless of whether it is explicitly stated or not.
News: The Open Source Initiative board has voted to certify the Python license as Open Source.
And if you had to ask, yes, this license is compatible with the GPL (sez RMS).
Copyright 1991-1995 by Stichting Mathematisch Centrum, Amsterdam, The Netherlands.
Permission to use, copy, modify, and distribute this software and its documentation for any purpose and without fee is hereby granted, provided that the above copyright notice appear in all copies and that both that copyright notice and this permission notice appear in supporting documentation, and that the names of Stichting Mathematisch Centrum or CWI or Corporation for National Research Initiatives or CNRI not be used in advertising or publicity pertaining to distribution of the software without specific, written prior permission.
While CWI is the initial source for this software, a modified version is made available by the Corporation for National Research Initiatives (CNRI) at the Internet address http://www.python.org.
STICHTING MATHEMATISCH CENTRUM AND CNRI DISCLAIM ALL WARRANTIES WITH REGARD TO THIS SOFTWARE, INCLUDING ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS, IN NO EVENT SHALL STICHTING MATHEMATISCH CENTRUM OR CNRI BE LIABLE FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES WHATSOEVER RESULTING FROM LOSS OF USE, DATA OR PROFITS, WHETHER IN AN ACTION OF CONTRACT, NEGLIGENCE OR OTHER TORTIOUS ACTION, ARISING OUT OF OR IN CONNECTION WITH THE USE OR PERFORMANCE OF THIS SOFTWARE.