in everyday life we do some actions (thought is also action). and every action we associate desired outcome or result. but mostof times thease results are not what we had thinked of.
so our mind strats collecting emotinal strain. (this is first step to start collecting stress). this emotinal strain gets collected in our nervous system and strats affecting our metabolism. and this effected metabolic system cases physical or mental illness. all this process is stress.
in other words stress is reaction (mental or physical) for unwanted happennings.

To reduce stress you should not bother about result of your deed or actions. accept all situation or people as they are.
oh what am i talking? is realted to "nishkama karma yoga". just think. :) we have solutions to all our problems in ancient knowladge.

live happy and stress free life. observe at least one spiritual practice everyday. May be "Art of living", "vipassana", "Sidhdha Samadhi yoga" or many many others is key to stress free happy life.
--
Love Moves the world.

Stress is the consequence of the failure to adapt to change. Less simply: it is the condition that results when person-environment transactions lead the individual to perceive a discrepancy, whether real or not, between the demands of a situation and the resources of the person's biological, psychological or social systems.

In medical terms, stress is the disruption of homeostasis through physical or psychological stimuli. Stressful stimuli can be mental, physiological, anatomical or physical reactions. The term 'stress' in this context was coined by Hungarian-Canadian endocrinologist Hans Selye, who defined the General Adaptation Syndrome or GAS paradigm in 1936.
Source wikipedia
http://en.wikipedia.org/wiki/Stress_(medicine)