Challenge-response tokens are:
- A workstation or system generates a random challenge string and the owner enters the string into the token along with the proper PIN.
- The token generates a response that is then entered into the workstation or system.
- The authentication mechanism in the workstation or system then determines if the owner should be authenticated.
Source: KRUTZ, Ronald L. & VINES, Russel D., The CISSP Prep Guide: Mastering the Ten Domains of Computer Security, 2001, John Wiley & Sons, Page 37.
Also: HARRIS, Shon, All-In-One CISSP Certification Exam Guide, McGraw-Hill/Osborne, 2002, chapter 4: Access Control (pages 136-137).