“Chazal” is the Hebrew acronym for "Chachameinu zicronam livracha", which literally means "Our Sages, their memory for a blessing".
The word Chazal refers to the great Rabbis of the Mishna and Talmud, such as Rabbi Akiva, Rabbi Shimon bar Yochai, Rav and Shmuel - and many others. They are the teachers and transmitters of the Oral Law of the Torah.
The wording of this phrase is based on a verse in Proverbs (10:7), “The mention of a righteous person is for a blessing, but the name of the wicked shall rot.”
In fact, based on this same verse, it is the widespread custom to refer to any righteous person who is no longer among us in this world as — the person’s Hebrew name followed by “zecher tzaddik livracha”, i.e., so-and-so his memory for a blessing. This phrase is often shortened to “zatzal” or “zal”. This verse in Proverbs and this Jewish custom is almost certainly the basis for the universal custom for people to say “of blessed memory”.
