One very important ground rule before we begin.

No Illegal Sharing.
This is a legal share thread. What this means is you can only post albums that are under a Creative Commons license, being distributed by the artist for free i.e. promotional copies, or the album has fallen under Public Domain. You can not post albums that are illegal to share over the net. This is still against the rules. If you're in doubt about a certain album then don't post it. Only post links to stuff you are 100% sure is legal to share.

What is a 'Creative Commons license'?
A creative Commons license is basically a copyright that lets you share the copyrighted works legally. There are a number of things you can't do with something under CC such as making money off the work. Each artist under Creative Commons will have a something on their homepage stating what you can and can not do with their work. E.g. some will let you use their music in your YouTube videos as long as you give a link back to them while others won't let you do that at all. Check the artists site before doing anything other than downloading and passing on the music to your friends.
You can learn more about CC here.

What is a 'promotional copy'?
A promotional copy is a copy of an album that the artist has released for free for publicity. It gives you a chance to listen to the album and decide if you want to buy it or not. Generally a promotional copy will have some voice over in the middle of songs saying its a promotional copy. If it does please warn people about this if you post one.

What is 'Public Domain'?
Copyright only lasts so long. After a while it runs out and the work goes into Public Domain. What this means is that anyone can use it and even make money off it. Please be careful when posting Public Domain works. While stuff like Mozart's compositions may be under Public Domain the performance may not be and thus is illegal to share. The performance has to also be under Public Domain for it to be legal.
Also note that certain countries have varying lengths as to when something goes into the Public Domain. Japan, for example, has a 50 year mark before something is in Public Domain but many other countries have far higher marks such a 75+.

Before I begin dumping some of my favorite albums here are some good sites for free music.
Piano Society.
Free Music Archive.
Free Metal Albums.
Internet Archive.

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Warning, some of the following albums may contain offensive language.

Say hello to Steadman(listening to them right now). The band that Paul McCartney tipped as the next big thing in English pop. I think he doesn't flatter them enough. The band album 'Revive' is easily one of my all time favorite albums. If you get anything in this thread make it Revive. But not only is Revive for free but their entire discography. Download em all here.

Nic Bommarito
Ok I may have exaggerated a bit with the last one but I guarantee you the next album is the greatest album of all time. 'Harp Fragments' is such a good album that its fighting for the top spot of my all time favorite albums with 'In the Aeroplane Over the Sea' and 'Traced In Air'. Its easily the best instrumental album I've ever heard. Just sit back and let the music flow over you. Harp Fragments here and full discography here.

The Kid Daytona
I have to list this wonderful Hip-hop artist as hes the man who got me into CC albums. At fist I was dubious as to whether any free album could be any good but after listening to his 'Come Fly With Me' album all doubts were gone. I was hungry and wanted more. While the lyrics at times leave something to be desired the music is addictive as hell and will have you bouncing around by the third track. His albums are all on his myspace here.

Diablo Swing Orchestra
While their latest effort isn't under CC and thus illegal to share their first album is. It won The Biggest Surprise award in 2006 Metal Storm awards and for good reason. If you're even the slightest fan of Avant-Garde metal then check it out. Download here.

Bi-Polar Bear
Another great Hip-Hop effort. Some of the songs really blow me away particularly the first one(language warning). Take a listen and if you like download it. Download here.

Paolo Pavan
Paolo is an absolutely beautiful piano jazz artist. Well worth checking out. No matter who I play it for it universally gets two thumbs up. Download here.

Professor Kliq
If you're a fan of electronic music in anyway then check out the Prof. His first Community Service album in particular has some amazing Big Beat tracks. The second is much more ambient styled but still worth checking out. Download all.

Various Artists
Fan of Fallout? Ever wanted to pretend you're listening to Galaxy News Radio? Try 31 free albums worth of classic oldies . Mac runs old Public Domain albums through period record players to get a lovely classic sound. Just take a listen to see what I mean. Download all 31 0.o. He also has a podcast if you're interested. Its found here.

The Dead Rocks
I'll leave you with some epic Surf Rock. I don't know what else to say about it other than its something you must check out. Download their Discography.

I'll upload more later. Please dump some of your own favorites.