Image Based Shading is an illumination technique that uses environment maps instead of light sources to calculate the lighting in the scene. This is an efficient way to simulate a complex lighting environment without any calculations for the illumination model but just a lookup in a diffuse and specular environment maps.
An imaged based shader is implemented like sphere mapping or cube mapping without the lighting model calculation part. The main difference is in the fragment shader where you look up a reflection color in the diffuse and specular environment maps in order to add a diffuse and specular lighting to the shading.
You use a light probe image to create an environment texture as for the sphere mapping. Diffuse and specular maps can then be obtained from the environment texture by applying a convolution filter such as a Gaussian filter.
Randi J. Rost, OpenGL Shading Language, Second Edition, Addison Wesley Professional, 2006