From Gerald Erichsen,
Your Guide to Spanish Language.
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Broadly speaking, in English something can happen in one of two places: here or there. But Spanish has three equivalent choices, making matters somewhat confusing for English speakers learning the language.

The three choices are aquí, roughly the equivalent of "here," ahí, roughly the equivalent of "there" when speaking of an object or action that is close to the person being spoken to, and allí, roughly the equivalent of "there" when speaking of an object that is distant from both the speaker and the person being spoken to. This distinction between ahí and allí isn't always clear-cut; the former is sometimes used to refer to something emotionally close rather than simply physically close to the listener, so allí can refer to emotional as well as physical distance.

Grammatically, all three of these words in Spanish (and the English equivalents as well) are known as adverbs of place.

Although allí and ahí can sound similar in regions where the ll sound is softened and they are often translated the same in English, you should be careful not to confuse them. Ask a native Spanish speaker, ¿Qué pasa ahí? ("What's happening there?"), and the person will likely look in his or her vicinity. But ¿Qué pasa allí? (which you might translate as "What's happening over there?") will have the person looking in the distance.

Here are some examples of these adverbs in use:

• Necesitas aceptar las condiciones aquí descritas. You need to accept the conditions described here.
• Vente aquí para comer. Come here and eat.
• La gente aquí es muy pacífica. The people here are very peaceful.
• Haz clic aquí. Click here.
• ¿Hay alguien allí? Is someone there?
• El hombre que nunca estuvo allí. "The Man Who Wasn't There" (title of movie)
• Te puedes sentar ahí. You can seat yourself there.
• Allí viene el heladero. There comes the ice cream man (in the distance).
• Como siempre ahí. I always eat there.
• ¿Qué hacen allí mirando al cielo? What are they doing there looking at the sky?

You might notice that these adverbs roughly correspond to the demonstrative adjectives and pronouns:

• Adverb of location: aquí. Demonstrative: este (this), éste (this one).
• Adverb of location: ahí. Demonstrative: ese (that), ése (that one).
• Adverb of location: allí. Demonstrative: aquel (that over there), aquél (that one over there).

As in English, these adverbs can occasionally be used as pronouns. A few examples:

• Los dulces de aquí son muy caros. The candy from here is very expensive.
• Desde allí puede ver el lago. From there you can see the lake.
• Aquí es donde nació Silvina. Here is where Silvina was born.

Regional variations: In some parts of Latin America, you may hear acá, allá and acullá used instead of (or in addition to) aquí, allí and ahí. You may also find some subtle variations in how these terms are used in different regions.

A final caution: Be careful not to confuse allí with the existential use of haber, such as using hay to mean "there is" or "there are." Although hay dos libros and dos libros están allí can both be translated as "there are two books," the two sentences in Spanish don't mean the same thing. Hay dos libros means "two books exist," while dos libros están allí means "two books are in that location." Read this lesson for more on this use of haber.