The Kubernetes Cluster Autoscaler automatically adjusts the size of a Kubernetes cluster based on workload demands. It scales out by adding nodes when pods cannot be scheduled due to insufficient resources and scales in by removing underutilized nodes when workloads decrease. The Cluster Autoscaler integrates with cloud provider APIs (such as AWS, GCP, or Azure) to provision or terminate nodes, helping optimize costs while ensuring sufficient capacity for running workloads.