APIs (Application Programming Interfaces) play a crucial role in enabling software interoperability by allowing different software systems to communicate effectively. They define a set of rules and protocols for requests and responses, facilitating data exchange between disparate systems or components. APIs allow developers to integrate different services, software, and functionalities into their applications without needing to understand the underlying implementations. This promotes modularity and flexibility in software development, as developers can leverage existing tools, platforms, and data sources to enhance their applications, thus fostering innovation and collaboration.