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US citizens can no longer cross the border, back into the US, from Canada, using only a driver's licence and birth certificate.  Due to changes in U.S. law that took effect June 1, 2009, there are more strict requirements for what identification is required; see the table below for a list of acceptable documents.
This article covers travel to Canada.  If you're travelling to the United States, see United States: Crossing the Border.

Required Documents for Crossing the Border

The documents required to cross the Canada-U.S. border depend on your citizenship, your age, and how you're travelling.  Please understand that customs officers can turn you away from the country you are trying to visit; travelling without the right documents could ruin your vacation.
Canada has implemented an entry requirement called an Electronic Travel Authorization (eTA). The eTA entry requirement applies to foreign nationals who are visa-exempt and who are boarding a plane to fly to Canada. Exceptions include U.S. citizens and travellers with a valid visa. Entry requirements have not changed for those travelling by land or sea. 
The application process takes a few minutes and costs CA$7.  The eTA is attached electronically to your passport and remains valid for either five years or to the expiry date of your passport, whichever comes first.  Each traveller must submit an application.  There is no need to apply through a third party at an inflated cost.  The official Government of Canada website is here.
Read the descriptions of the application form fields here.
All passengers on arriving international flights fill in the simple customs declaration form handed out on the plane.

Citizens of the United States

This table lists the documents you need to visit Canada and to return home hassle-free.

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A passport (or NEXUS card) is required to cross the border by air.  This applies if your trip includes a flight between a Canadian and American airport.  However, if you have an Enhanced Driver's Licence or U.S. Passport Card, you can still drive across the Canada/U.S. border and take a domestic flight (e.g. drive Buffalo to Toronto, fly round-trip Toronto/Winnipeg, drive back to Buffalo).  From CBSA " If you are a citizen of the United States, you do not need a passport to enter Canada. However, you should carry proof of your citizenship, such as a birth certificate, certificate of citizenship or naturalization, as well as photo identification. " But you will need a Passport Book (if traveling by air), or Passport Card (if traveling by land) to re-enter the United States, so the border agents will check that you have one to be able to re-enter the U.S. For more details, see   Canada Border Services Agency     U.S. citizens with a criminal...

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A passport (or NEXUS card) is required to cross the border by air.  This applies if your trip includes a flight between a Canadian and American airport.  However, if you have an Enhanced Driver's Licence or U.S. Passport Card, you can still drive across the Canada/U.S. border and take a domestic flight (e.g. drive Buffalo to Toronto, fly round-trip Toronto/Winnipeg, drive back to Buffalo).  From CBSA " If you are a citizen of the United States, you do not need a passport to enter Canada. However, you should carry proof of your citizenship, such as a birth certificate, certificate of citizenship or naturalization, as well as photo identification. " But you will need a Passport Book (if traveling by air), or Passport Card (if traveling by land) to re-enter the United States, so the border agents will check that you have one to be able to re-enter the U.S. For more details, see   Canada Border Services Agency     U.S. citizens with a criminal...