Mutton is a food source in Minecraft which is obtained upon a sheeps death.
A sheep will drop 1–2 raw mutton when killed, unless it is on fire. More drops can be obtained using the looting enchantment.
To cook a piece of raw mutton you simply place it in a furnace. When it has finished cooking it will become a piece of cooked mutton which gives more food bars than raw mutton.
The image above is a piece of cooked mutton.