http://or.essortment.com/jakebraketruck_raio.htm

"...With the fuel flow terminated, the upward moving first stroke still compresses the air to very high pressure. As we said above, this transfers mechanical energy into heat as the air becomes highly compressed. If nothing else were done, most of this energy would be recovered, except for frictional losses, as the cylinder moved back down and the compressed air expanded.

The Jake brake, however, opens the exhaust valve just as the air reaches maximum compression, dumping all of that energy in an almost instantaneous explosive release. The result is a very effective slowing of the vehicle as mechanical energy is converted to heat and then dumped. The Jake brake effectively transforms the internal combustion engine into an air compressor.

It has only one drawback: it is very noisy...

...Because it extends the life of wheel brakes and saves money, trucking companies generally lobby against the bans and some towns are compromising by allowing the Jake brake to be used in daylight hours. ..."