AndroidChat is a location aware chat client (and server, but more on that later) for the Android Platform designed to compete in the Android Developers Challenge.

More technically, the project consists of modifications to the inspircd irc daemon to support location-awareness services, and a client for Google’s Android platform which supports location based channel matching.

Probably one of the first things you should do before actually running the client is read the manual.

http://code.google.com/p/androidchat/