This is a nebula inside a nebula, caused by two stars pulling each other apart, as photographed by the Hubble Space Telescope.
From the description at the NSSDCA Photo Gallery:
Images taken with Earth-based telescopes have shown the larger,
hourglass-shaped nebula. But this picture, taken with NASA’s Hubble
Space Telescope, reveals a small, bright nebula embedded in the center
of the larger one (close-up of nebula in inset). Astronomers have dubbed
the entire nebula the “Southern Crab Nebula” (He2-104), because, from
ground-based telescopes, it looks like the body and legs of a crab. The
nebula is several light-years long.