Chaucer was a genius of irony. He frequently exposes hypocrisy among all of his characters, especially those in the clergy. "The Pardoner's Tale" is perhaps the most extreme example in the book. For a little historical context, in Chaucer's day it was a relatively common practice for the church to sell forgiveness, or pardons. The Pardoner makes this even more sinister by openly admitting that he is fraud. He in fact has no authority to sell pardons.
The story tells of a group of people on a quest after Death. They aim to defeat this evil, but out of greed all plot to kill and betray one another for gold that they have found. One member of the party goes to get wine and food while the others stay behind. The group that stays plot to kill the other for his share; the one that leaves plans to poison the others. After the larger group betrays and murders their companion, they consume the poisoned wine and die as well.
The basic irony is simple: a man of lies and greed is preaching against lies and greed. The pardoner is abusing the principle of the story to serve a selfish purpose. What is more interesting, however, is how Chaucer opens this up to raise even larger questions. Aren't all people, after all, imperfect; and so isn't the practice of all pardons in some way corrupt? All moral services are performed to some extent by immoral people. Additionally, if the party is genuinely moved by the story, does the greed of the teller really affect the outcome? How important is the character of the storyteller in a moral parable?