It means 'scary' or 'frightening' and it is opposite of kawaii wich means 'cute'.
<a> Have you seen that face?
<b> Yeah... It's little bit kowai...
<a> This is so kowaii! O_O
<b>It's KOWAI and not KOWAII.... tte bayo!
<a> NO! IT ISN'T!
<b> Yes, it is... Baka!