Slime

The Slime is the fifth hostile mob, and was added on July 23, 2010 (Seecret Friday 6! Alpha 1.0.11). They appear as green semi-transparent cubes. Slimes come in four official sizes: huge, big, normal, and small. While slimes that are normal or larger will make a wet slapping noise, small slimes will make the same noise as the block they are jumping on. They are the first hostile mob that can spawn in both light and dark areas. These creatures are only naturally found deep underground in the bottom 16 layers of the map. They usually spawn in large, cavernous spaces or in open mines. This is partially caused by the fact that a large space is needed for them to spawn.

Killing a slime of any size but the smallest will cause it to break into four smaller slimes, unless it is killed with a weapon that deals at least more damage than is needed to kill it. For example, causing a total of 8.5 hearts of damage to a big slime will cause it to die rather than split, but if a total of 8 hearts of damage have been dealt, then it will split. Slimes do not grow larger over time. The small slimes cannot directly do damage, but they can easily push the player into other hazards such as lava. The smallest variation of slime are often kept as pets by players because they do not do any damage and follow the player around harmlessly.

Slimes of any size will begin to take burn damage upon touching lava and die moments later without splitting into smaller slimes. Slimes cannot swim; therefore, they will drown if they are completely submerged in water and will be unable to jump out. Slimes have the ability to climb ladders, enabling them to follow the player out of caverns.

Killing a small slime yields 0-2 units of Slimeballs, which currently serve no purpose whatsoever. slimes seem to be the rarest mob

Drops
Beta:
 * 0-2 units of Slimeballs (Small slimes only)

History
When slimes were first introduced, they spawned at a very high rate. This caused Notch to limit slime spawning. However, it appears that he incorrectly calculated slime spawning, leading slimes to spawn only in strange locations. This eventually caused Notch to completely disable natural slime spawning. Later, Notch confirmed in Coestar's livestream that slimes have been returned as of Beta 1.2_01, but are very rare. As of Beta 1.3, Slimes spawn have been increased once again, appearing much more commonly than in 1.2_01.

Trivia

 * A good way to farm slimes or slimeballs is to make a room 9 blocks wide and 5 blocks high near or on bedrock and cover the walls with torches. If the room is big enough, slimes will spawn.
 * In Beta 1.3, Slimes were able to spawn even on Peaceful and they would attack players without any provocation. But as of Beta 1.5, Slimes will not spawn on peaceful, but when the difficulty is changed to peaceful, slimes will not despawn. Slimes also appear to hug around walls and corners, and not venture into the middle of a room, even if the room is over 100 by 100 blocks large.
 * In Beta 1.3, slimes in multiplayer that split would only be visible to the player that caused them to split. Because of this, they would not take any damage. Because they were located on the client's side, the player could only remove the slimes by exiting and re-entering the server. This has been remedied as of Beta 1.4.
 * Slimeballs can be farmed by punching Slimes to death instead of using a tool like a sword or an axe. This guarantees they will split into four more slimes, instead of merely dying. This means: 1 Huge Slime = 4 Big slimes = 16 normal slimes = 64 small slimes = 0-128 drops.
 * Slimes may have been inspired by a number of classic gaming monsters: Their shape and size resemble that of Gelatinous Cubes from Dungeons & Dragons (though admittedly that probably comes more from Minecraft's cubic art design than as a direct homage), and their splitting behavior resembles that of Zols from The Legend of Zelda and Puddings from Nethack. The name and the large, cartoonish face may be an homage to Yuji Horii's iconic Slimes from the Dragon Quest series.
 * When slimes damage a player, they will make a splatting sound, far different to the sounds heard from their leaping.
 * Slimes can glitch in multiplayer and cause models to be incorrect. For instance, a small slime could actually be a big slime but not show it correctly.
 * Large numbers of slimes are known to cause severe localized lag in multiplayer.
 * The Huge Slimes are just under a 2x2x2 cube size.
 * When Slimes are killed by wolves they will not split.
 * Slimes bigger than small slimes can spawn on peaceful and will still cause damage, providing there is enough space for them to spawn. They do not despawn when the difficulty is set to peaceful.
 * The largest type of slime is the second biggest (naturally spawned) mob, with Ghasts being the biggest.
 * In SMP, Normal slimes sometimes do not cause damage, although this is uncommon.