A small (usually between 10 nF and 100 nF) capacitor connected between a power pin of an IC (Vcc, Vdd, Vee, etc.) and its ground pin. In digital circuits, it acts primarily to keep the IC's supply voltage constant during logic state transitions, during which IC supply current typically spikes. With analog ICs, such as op amps, the decoupling capacitor acts to minimize power supply impedance at high frequencies, helping to prevent spurious oscillations.
It is placed as close to the power and ground pins as possible, to minimize the inductance of the traces connecting the decoupling capacitor to the chip.
If decoupling capacitors are placed too far away from an associated digital IC, false operation (e.g., "glitches") may result. With analog ICs, the circuit may oscillate.
Re-arrange things so that you do NOT have to place the decoupling capacitor far from its associated IC.
Finally, do read the tutorial linked to in HK's post #2, and heed its recommendations.