Time Lord Physiology
To a cursory inspection, the Time Lords look like fairly normal human beings. This belies their actual nature as their bodies are vastly different from humans. The most obvious difference is that when the Time Lords age, or when their bodies are subjected to stresses that would kill a normal being, they have the ability to regenerate.
This regeneration takes the form of a complete physical and mental change, with their bodies and mental states both altered in a very short period of time. The changes can often be very large ones, frequently to the discomfort of people who knew the former incarnation. A regenerated Time Lord can often appear to be totally different from the person he or she may have been before. In fact, the changes are not so great as they might at first appear; there is a measure of continuity. Each regeneration is the same basic person, but what occurs is a shift in the emphasis of the mix that makes up their physiological and psychological profiles.
The ability to regenerate is not without its limits. A Time Lord may only regenerate twelve times. Regeneration is generally triggered by a period of great stress, and for a vast majority of the Time Lords, such periods rarely happen. Living their quiet life in the serenity of the Citadel, there is little danger in their lives, and few Time Lords are ready to leave the Citadel for the stresses of other places. In this environment, then, Time Lords probably do live a nearly immortal life.
Those who elect to leave the Citadel will naturally use up their regenerations faster. Time Lords who frequently place themselves in jeopardy, get through their remaining incarnations quickly.
Since regeneration is an outgrowth of the Time Lord's personality, it is possible to predict future regenerations, and then (probably) possible to shape the regeneration process so as to produce the desired end result.
How does regeneration occur? Certainly, on the whole, the process is very swift. The old body breaks down, and the new one takes its place--at least in the most ideal of circumstances. However, complications can arise, especially as the number of regenerations already undergone approaches the final ones permissible. In the most troublesome of cases, the Time Lords will use the Elixir of Life to strengthen the changes. The TARDIS will usually help it's pilot to regenerate, especially if it's a first regeneration. Another Time Lord can help with the regeneration.
Along with this obvious difference of regenerative ability-- which other races have envied and attempted to copy, the Time Lords possess other abilities that other races do not. For example, Time Lords can engage in almost total metabolic shutdown in their bodies when they are faced with overwhelming assaults on their senses. It induces a state of catatonia.
Time Lords are telepathic beings, and can recognize one another using their mental patterns--highly useful since their physical appearance can change so dramatically after a regeneration. They can impart information very swiftly using mental contact.
Time Lords have a secondary cardiovascular system that is virtually independent of their first. In the case of a heart failure in their primary system, their second heart takes over the functions of keeping the body alive while the first heart undergoes self-healing. Because of this ability to switch vital functions, Time Lords have remarkable recuperative powers. Wounds that would be fatal to normal beings can be repaired quite swiftly, and they are able to withstand tremendous strains on their systems. They are able to go into self-induced trances to draw upon this healing power.
RASSILON IMPRIMATURE: Symbiotic nucleus contained within the Time Lords' physiology that is somehow linked to their ability to withstand the molecular destabilization caused by time travel, and to achieve quasi-symbiotic control of their TARDISes. Indeed, the Rassilon Imprimature was needed to "prime" a TARDIS. Sontaran Group Marshal Stike allied himself with Chessene to capture the Second Doctor, whom they planned to dissect in order to obtain the secret of the Imprimature, but they were thwarted by the Sixth Doctor.