Within The Lord of the Rings, the following three explanations are given:
You do not know, perhaps, how strong we are. Maybe you have heard of Trolls? They are mighty strong. But Trolls are only counterfeits, made by the Enemy in the Great Darkness, in mockery of Ents, as Orcs were of Elves. We are stronger than Trolls. We are made of the bones of the earth. We can split stone like the roots of trees, only quicker, far quicker, if our minds are roused! If we are not hewn down, or destroyed by fire or blast of sorcery, we could split Isengard into splinters and crack its walls into rubble.
The Lord of the Rings - Book III Chapter 4 - Treebeard
`No, they eat and drink, Sam. The Shadow that bred them can only mock, it cannot make: not real new things of its own. I don’t think it gave life to the orcs, it only ruined them and twisted them; and if they are to live at all, they have to live like other living creatures. Foul waters and foul meats they’ll take, if they can get no better, but not poison. They’ve fed me, and so I’m better off than you. There must be food and water somewhere in this place.’
The Lord of the Rings - Book VI Chapter 1 - The Tower of Cirith Ungol
The Orcs were first bred by the Dark Power of the North in the Elder Days. It is said that they had no language of their own, but took what they could of other tongues and perverted it to their own liking; yet they made only brutal jargons, scarcely sufficient even for their own needs, unless it were for curses and abuse. .... But at the end of the Third Age a troll-race not before seen appeared in southern Mirkwood and in the mountain borders of Mordor. they were called in the Black Speech. That Sauron bred them [the Olog-hai] none doubted, though from what stock was not known. Some held that they were not Trolls but giant Orcs; but the Olog-hai were in fashion of body and mind quite unlike even the largest of Orc-kind, whom they far surpassed in size and power.
The Lord of the Rings - Appendix F - Of Other Races
It should be noted however, that although this is what is said in The Lord of the Rings itself, Tolkien's final views on the matter were that Orcs were corrupted Men.