From BlenderWiki

Note: documentation in progress, to be incorporated in one of the following:

http://wiki.blender.org/index.php/Doc:2.6/Manual/Render/Cycles http://wiki.blender.org/index.php/Doc:2.6/Manual/Render/Bake

Render Baking

Refer to Blender main Render page for general baking guidelines: http://wiki.blender.org/index.php/Doc:2.6/Manual/Render/Bake

Cycles uses the render settings (samples, bounces, ...) for baking. This way the quality of the baked textures should match the result you get from the rendered scene.

Options

Ambient Occlusion

Bake Mode

Combined

Bakes all materials, textures, and lighting except specularity and SSS.

Ambient Occlusion

Bakes ambient occlusion as specified in the World panels. Ignores all lights in the scene.

Shadow

Bakes shadows and lighting.

Normals

Bakes normals to an RGB image.

Normal Space

Normals can be baked in different spaces:

World space

Normals in world coordinates, dependent on object transformation and deformation.

Object space

Normals in object coordinates, independent of object transformation, but dependent on deformation.

Tangent space

Normals in tangent space coordinates, independent of object transformation and deformation. This is the default, and the right choice in most cases, since then the normal map can be used for animated objects too.

Normal Swizzle

Axis to bake into the red, green and blue channel.

For materials the same spaces can be chosen as well, in the image texture options, next to the existing Normal Map setting. For correct results, the setting here should match the setting used for baking.

UV

Bakes colors of materials and textures only, without shading.

Emit

Bakes Emission, or the Glow color of a material.

Environment

Bakes the environment as seen from the center of the object.

Diffuse Color/Direct/Indirect

Bakes the diffuse pass of a material. Diffuse Color is a property of the surface and independent of sampling refinement.

Glossy Color/Direct/Indirect

Bakes the glossiness of a material. Glossy Color is a property of the surface and independent of sampling refinement.

Transmission Color/Direct/Indirect

Bakes the transmission of a material. Transmission Color is a property of the surface and independent of sampling refinement.

Subsurface Color/Direct/Indirect

Bakes the subsurface pass of a material. Subsurface Color is a property of the surface and independent of sampling refinement.

Additional Options

Width

Horizontal dimension of the baking map.

Height

Vertical dimension of the baking map.

Margin

Baked result is extended this many pixels beyond the border of each UV "island," to soften seams in the texture.

File Format

File format to save the baked images as.

Select to Active

Bake shading on the surface of selected object to the active object. The rays are cast from the lowpoly object inwards towards the highpoly object. If the highpoly object is not entirely involved by the lowpoly object, you can tweak the rays start point with Cage Extrusion. For even more control of the cage you can use a Cage object.

Cage Extrusion

Distance to use for the inward ray cast when using selected to active

Cage

Object to use as cage (instead of the lowpoly object).