The belief in “ayin hara”, the Evil Eye, is not a superstition but is well founded on references from the earliest Jewish texts. Sarah "gives" Hagar an Ayin Hara, causing her to miscarry her first pregnancy, see Bereshit 16:5, Rashi. Yaakov warns his sons not to be seen together so as not to incur Ayin Hara, see ibid. 42:5, Rashi. Another example is King Saul's jealousy of the future King David who is credited with greater military prowess and "gives" him an Ayin Hara, see Shmuel 1,18:9.
The Talmud, Tractate Berachot 20a, quotes Rabbi Yochanan as saying "I am a descendant of Yosef over whom Ayin Hara had no control." The Talmud, Tractate Bava Batra 141a, also states that fish represent a form of life that is free of the influence of Ayin Hara. According to one opinion of the Talmud, a first-born daughter prevents Ayin Hara from affecting the family.
Ayin Hara also has Halachic ramifications. The Talmud, ibid. 2b, states that it is forbidden to stand in a neighbor's field when the crops are fully grown. Rashi explains that this is forbidden because of Ayin Hara.
Rabbi Eliyahu Dessler, Michtav M'Eliyahu, vol. 3, pp.313-314 and vol. 4, pp.5-6, in a letter to his father asked "Where is the justice in a system that causes people to suffer for the jealousies of others?" Rabbi Dessler answered that what happens is the following: One person who has what another person lacks is "careless" and lets the other person see what he has. This causes pain to the other person, and his cry goes up to the Heavenly court.
The lesson in all of this is that we must learn to be sensitive to others. Many people yearn to have what others have, and suffer real pain when they see others. True, they shouldn't be jealous, but we cannot expect everyone to be a Tzaddik. Divine justice demands retribution for causing this pain to another person.
Many people have the custom to say the words "Bli Ayin Hara" (literally "Without the Evil Eye"). In Yiddish it is rendered as "Ken Ayin Hara." We say this as a prayer to Hashem, so that if there are any silent cries going up to the Heavenly court, He will not listen to them, and He will protect us from any harm. There are other Ayin Hara "antidotes" such as tying red strings around one's wrist, and the "Hamsa" ("Five-Fingers"). Be careful not to use any remedy or prevention unless it is commonly used by Jews, since some practices are forms of witchcraft. The best protection is to behave modestly and with a genuine concern for the feelings of others.
The dye used to make the red string, originally came from a type of worm. Rabbi S R Hirsch explains that this was the lowliest form of life and yet it was still intrinsic to the Temple. If the whole point of the red string is to help ward off the Evil Eye, what better way to do so than with something that represents, not just the dye, but the lowly worm itself. Each time a successful person looks at the string he is reminded of who he really is, that is the ultimate weapon against the Evil Eye. Having said that, many, many great Rabbis frown upon it and do not condone it.