Depends on the species, actually. Some are cryptically colored and look very much like something else: leaves, sticks, bird droppings, etc. Some caterpillars avoid being seen by hiding in webbing: fall webworms and tent caterpillars are examples. read more
Yet another way to avoid predators is spikes filled with poison, a bad taste, and illness such as vomiting (this is known as a"poisonous" caterpillar, which causes harm to predators that eat or touch the caterpillar; once the predator receives the effects of the toxins, it learns to avoid that kind of caterpillar, and any other caterpillar that mimics it). read more
Although many adult butterflies employ mimicry — where one species develops warning color patterns similar to another species' — to quickly teach predators which insects to avoid, scientists have observed few definitive cases of caterpillars using this strategy. read more
Yet another way to avoid predators is spikes filled with poison, a bad taste, and illness such as vomiting (this is known as a" poisonous" caterpillar, which causes harm to predators that eat or touch the caterpillar; once the predator receives the effects of the toxins, it learns to avoid that kind of caterpillar, and any other caterpillar that mimics it). read more