Software Engineering Institute

The Windows Local Security Authority Subsystem Service (LSASS) is a process that enforces the local security policy.

Per Microsoft Security Bulletin MS08-002:
An elevation of privilege vulnerability exists in the Microsoft Windows Local Security Authority Subsystem Service (LSASS) due to its improper handling of local procedure call (LPC) requests. The vulnerability could allow an attacker to run code with elevated privileges. An attacker who successfully exploited this vulnerability could take complete control of an affected system. An attacker could then install programs; view, change, or delete data; or create new accounts with full user rights.

A local, authenticated attacker may be able gain elevated privileges or execute programs in the context of a different user.

Update

Microsoft has released an update to address this issue. See Microsoft Security Bulletin MS08-002 for more information.