7-Zip supports extracting and compressing many popular archive formats including 7z, ZIP, GZIP, BZIP2, TAR, RAR, ARJ, CAB, DMG, ISO, LZH, MSI and more
Supports: Windows7 / Vista / XP
High compression ratio in new 7z format with LZMA compression
Supported packing / unpacking formats: 7z, ZIP, GZIP, BZIP2 and TAR
Supported formats for unpacking only: ARJ, CAB, CHM, CPIO, DEB, DMG, HFS, ISO, LZH, LZMA, MSI, NSIS, RAR, RPM, UDF, WIM, XAR and Z.
Compression ratio for ZIP and GZIP formats: 2-10 % better than the ratio provided by PKZip and WinZip
Strong AES-256 encryption in 7z and ZIP formats
Self-extracting capability for 7z format
Integration with Windows Shell
Powerful File Manager
Powerful command line version
Plugin for FAR Manager
Localizations for 74 languages
The program and its source can be downloaded for free directly from here.