We study adiabatic (curvature) and entropy (isocurvature) perturbations pro
duced during a period of cosmological inflation that is driven by multiple
scalar fields with an arbitrary interaction potential. A local rotation in
field space is performed to separate out the adiabatic and entropy modes. T
he resulting field equations show explicitly how on large scales entropy pe
rturbations can source adiabatic perturbations if the background solution f
ollows a curved trajectory in field space, and how adiabatic perturbations
cannot source entropy perturbations in the long-wavelength limit. It is the
effective mass of the entropy field that determines the amplitude of entro
py perturbations during inflation. We present two applications of the equat
ions. First, we show why one in general expects the adiabatic and entropy p
erturbations to be correlated at the end of inflation, and calculate the cr
oss correlation in the context of a double inflation model with two non-int
eracting fields. Second, we consider two-field preheating after inflation,
examining conditions under which entropy perturbations can alter the large-
scale curvature perturbation and showing how our new formalism has advantag
es in numerical stability when the background solution follows a non-trivia
l trajectory in field space.