A harmful status condition which prevents you from being able to move. You can still cast skills/spells but they will fail often and your hit (for melee attacks) is lowered significantly. Your weapon and shield are also stripped, this is similar to stripping/divesting.
Resistance can be gained (up to 50%) through increasing LUK. No items currently exist to resist it, but they are planned.
Chemical protection can prevent the stripping of the weapon and shield, however, if chemical protection is applied after the status effect has already been inflicted it will have no effect. If you remove your weapon or shield while paralyzed you will not be able to put them back on even if you have chemical protection.
+1/+2 Restoration Elixirs will protect against it and all other status conditions for a short time.