CIAO is a stellar Coronagraph Imager with Adaptive Optics for use on the Subaru 8.2-m telescope, whose aim is to obtain diffraction limited images of faint objects in close vicinity of bright objects at infrared wavelengths. The instrument is a near-infrared camera with a sophisticated coronagraph capability optimized for use between 1 and 5 micron and is used in conjunction with the adaptive optics system. A number of occulting masks and pupil masks with various sizes and shapes are selectable, all cooled down to below 80 K. Care is taken to minimize the diffraction and scattering effects both in the telescope and in the instrument. Great care is also taken to design the tension-strap supported cryostat which minimizes the flexure within the cryostat. The camera will utilize an SBRC 1024×1024 InSb detector array. Facilities are also provided for polarimetry and grism spectroscopy. CIAO will be a very powerful instrument to study circumstellar disks around both young stellar objects and main-sequence stars, companion brown dwarfs and other kinds of companions, extra-solar planets, jets and outflows from both young stars and evolved stars, circumnuclear regions around AGNs, and host galaxies of QSOs.