A lurking variable is a variable that is not included as an explanatory or response variable in the analysis but can affect the interpretation of relationships between variables. A lurking variable can falsely identify a strong relationship between variables or it can hide the true relationship. For example, a research scientist studies the effect of diet and exercise on a person's blood pressure. Lurking variables that also affect blood pressure are whether a person smokes and stress levels.
In statistical models, the error term explains lurking variables that affect the process. To discover lurking variables, you must take the time to understand your data and the important variables that can affect a process. You can also create a plot of the data to look for non-linear trends that can identify the presence of lurking variables.