Most detailed explanation of the ISS ammonia leak and tomorrow's spacewalk
Its not much different than your cars cooling system, which transfers heat away from the engine. Whereas you fill your car with antifreeze typically water, ethylene glycol and other chemicals NASA uses ammonia because it represents a combination of low toxicity, flammability and freeze temperature while being relatively stable and cheap.
Each solar array has its own cooling loop that runs through one of the stations radiators. The radiators are the white-grey, folded panels that extend off the station perpendicular to the solar arrays. Each radiator has seven panels and extends about 50 feet (15 meters) into space.
A diagram of the radiator as used during construction of the station. Radiators were first part of the Early External Active Thermal Control System (EEATCS).
The troublemaking radiator extends from the P6 truss, the furthest segment of the station on the port side. It is here where the crew noticed small white flakes floating into space.
More:
http://www.planetary.org/blogs/guest-blogs/jason-davis/station-suffers-ammonia-leak.html