The steps of speciation are reproductive isolation and genetic change. In many cases, reproductive isolation occurs prior to genetic changes, but they can happen simultaneously as well. In either case, speciation results in a new species that cannot breed with its species of origin.
There are three types of speciation: allopatric speciation, parapatric speciation and sympatric speciation. Allopatric speciation occurs when geographic barriers separate a population. In this case, the two groups cannot interbreed because they are not in contact, and each goes through genetic changes that make them incompatible with the other sub-population.
Parapatric speciation occurs not because of the geographical isolation of a sub-population, but because of a behavioral change in a sub-population, such that it fills a different ecological niche. One example is a small group specializing in a different species of prey than the greater population. This can lead to reproductive isolation evolutionary changes that form a new species.
Sympatric speciation is a case where a sub-population undergoes a genetic change at the same time as it becomes reproductively isolated. In this case, the sub-population can occupy the same niche, in the same location, as the original population. One example is a species of saltmarsh grass that derives from cross-breeding between American saltmarsh grass and European saltmarsh grass, but is incompatible with either parent species.