Yes, the 529 plan (also known as a "qualified tuition program") allows you to distribute and roll over funds from one 529 plan to another 529 plan for the benefit of a member of the original beneficiary's family. The rollover must be done within 60 days after the date of the distribution.
For example, consider a situation where you have set aside savings for your children's education in separate 529 plan accounts and they do not use all of the money. You can keep your children as beneficiaries until they have their own children, and then make their children the beneficiaries. Your grandchildren would be among the beneficiary's family members who are eligible for this rollover. Furthermore, this rollover will be a nontaxable transaction.
(For further reading on this topic, see Choosing The Right Type Of 529 Plan, Investing In Your Child's Education and Don't Forget The Kids: Save For Their Education And Retirement.)
This question was answered by Denise Appleby