Does use of the air conditioner decrease mileage?

Yes, fuel consumption will increase with use of your AC system. Your serp belt is only turning a free-wheeling pulley on the front of your AC compressor. When you request AC, an electric clutch behind the AC pulley engages, then your serp belt is turning a demanding compressor. This excess load will actually drop engine RPM briefly at an idle or while cruising. Your vehicle control system will respond by raising the idle to compensate. It is this compensated idle and engine load that brings you back to the gas pumps on the hottest days.

While use of the AC does increase energy consumption, running the AC at freeway speeds is more efficient than opening the windows for cool air. The increased drag caused by open windows uses more fuel than the AC. Around town, however, the AC is less efficient than rolling down the windows.

To reply to the answer about fuel mileage being better at highway speeds vs. rolling down the windows, this is only true in some cases. If you have a small enough engine, running the A/C at highway speeds can have a worse affect on mileage than opening the windows.