The Chameleon Arch was a piece of Time Lord equipment which could modify the biology of a creature so the cells were that of something else. The procedure was very painful. It was composed of a headset and a fob watch-like device, with an added perception filter, used to store the Gallifreyan biological information.
The Chameleon Arch changes every cell in the user's body. However some traits of the true user's Time Lord heritage may remain; John Smith was able to deliberately cause a complex chain reaction to save a mother and her baby from being crushed by a piano, Smith also kept a dream journal in which he chronicled memories of the Doctor's adventures, while Professor Yana heard drums beating in his head all his life, and both Smith and Yana possessed great intellects.
The Doctor used one to change himself into the Human John Smith so he didn't have to punish the Family of Blood. (DW: Human Nature)
The Master also used it to turn into a Human to escape the Last Great Time War, and remained in human form until he opened the watch part and remembered everything that the Doctor had done to him. (DW: Utopia)