A UTXO transaction (Unspent Transaction Output transaction) in Bitcoin is a type of transaction that involves the transfer of ownership of a specific amount of bitcoin from one address to another. In Bitcoin, the system keeps track of each coin's ownership history through a series of transactions.

In a UTXO transaction, the sender specifies which unspent transaction outputs (UTXOs) they want to use as inputs to the new transaction. These UTXOs represent specific amounts of bitcoin that were sent to the sender's address in previous transactions and have not yet been spent.

The UTXOs are then combined to cover the transaction amount and any transaction fees, and the resulting balance is sent to one or more new addresses, which become the new UTXOs. Any remaining balance after the transaction is complete is sent back to the sender as "change" in a new UTXO.

For example, if Alice wants to send 1 BTC to Bob, but she only has two UTXOs of 0.5 BTC each, she can combine those UTXOs as inputs to the new transaction and specify that 1 BTC should be sent to Bob's address. The resulting UTXO would be a new UTXO for Bob's address, and a new UTXO for Alice's address representing the change of 0.5 BTC.

UTXO transactions are a fundamental building block of the Bitcoin network and are used to ensure that each bitcoin is uniquely owned by its current owner, making it a powerful tool for preventing double-spending and ensuring the integrity of the network.