Jan 4 2025 Update: This feature has become much more useful over the years. On-device Dictation without an internet connection is available for supported languages and Mac configurations; other configurations may require internet access. With Dictation enabled, check the text below Dictation in System Settings > Keyboard to see how your Mac processes speech and whether it needs a connection. Dictation types as you talk, and some computers have a built-in microphone button on the keyboard that you can use instead of the FN-double-tap. The original instructions and screenshot below describe OS X Mountain Lion.
Mac OS X Mountain Lion added built-in support for voice dictation. To activate, insert your cursor where you want to dictate and double tap the FN key on your keyboard. Tap the FN key again to finish.
If the microphone icon doesn't pop up you may need to enable the feature in the Apple menu > System Preferences > Dictation & Speech > Dictation.
While it's not as robust as fully featured dictation software like Dragon, it works pretty well in a pinch. The biggest drawback is that most dictation software will type while you talk, but Mountain Lion's dictation only transcribes after you finish. You will also need to have a live internet connection.
