A continuous integration pipeline functions in software development by automating the process of integrating code changes from multiple contributors into a shared repository. When developers commit code, the pipeline triggers automated tests and builds, verifying that the new code does not introduce errors. If the tests pass, the code is merged into the main branch, allowing for consistent and reliable software updates. This workflow encourages frequent code changes, enhances collaboration among team members, and improves the overall quality of the software, enabling faster delivery of new features and bug fixes.