From SRD
HIDE (DEX; ARMOR CHECK PENALTY)
Check: Your Hide check is opposed by the Spot check of anyone who might see you. You can move up to one-half your normal speed and hide at no penalty. When moving at a speed greater than one-half but less than your normal speed, you take a –5 penalty. It’s practically impossible (–20 penalty) to hide while attacking, running or charging.
A creature larger or smaller than Medium takes a size bonus or penalty on Hide checks depending on its size category: Fine +16, Diminutive +12, Tiny +8, Small +4, Large –4, Huge –8, Gargantuan –12, Colossal –16.
You need cover or concealment in order to attempt a Hide check. Total cover or total concealment usually (but not always; see Special, below) obviates the need for a Hide check, since nothing can see you anyway.
If people are observing you, even casually, you can’t hide. You can run around a corner or behind cover so that you’re out of sight and then hide, but the others then know at least where you went.
If your observers are momentarily distracted (such as by a Bluff check; see below), though, you can attempt to hide. While the others turn their attention from you, you can attempt a Hide check if you can get to a hiding place of some kind. (As a general guideline, the hiding place has to be within 1 foot per rank you have in Hide.) This check, however, is made at a –10 penalty because you have to move fast.
You would need to have already been hiding before you began being observed or you would need to momentarily distracted your observers. You can hide in the open with no additional cover or concealment wile using the Blur spell but you need to start hiding wile not being observed by those you want to hide from.