Tom Stoer gave the correct answer.
Basically decoherence works like this. A pure state through interaction with the environment looses phase to it and formally looks like what is known as a mixed state. Note the word formally - by this is meant no experiment can tell it from a mixed state - but it is not a mixed state - Schlosshauer calls it an improper mixed state.
The way decohence would be used in an interpretation of QM would be to assume in the interpretation the improper mixed state is an actual mixed state. Since no experiment can tell the difference it leads to no inconsistency. If you do that much, if not all, the mystery of QM disappears. But it is an interpretative assumption which like all interpretations you may or may not accept.
The reason a mixed state solves the problem is its interpretation is an actual state the same as the measurement and the measurement reveals what is there so no collapse occurs. Decoherence does not explain how the collapse occurs - no mechanism is provided - it merely says you can interpret it that way. If it solves the measurement problem depends purely on what you are willing to accept as a solution.
My interpretation of QM is an updated version of the ensemble interpretation where you call the usual probabilities calculated from the state pre-probabilities that have the potential to represent measurement outcomes if you set up a measurement apparatus to do it but are not real until you do so. When you do so decoherence occurs in the apparatus and the measurement selects an outcome from a conceptual ensemble of possible outcomes. The difference between that and the normal ensemble interpretation is, because of decoherence, you can consider it to have that property prior to observation so no actual collapse occurs. In the normal ensemble interpretation you can't do that and you have to resort to the unnatural assumption it selects an outcome from the ensemble of measurement apparatus and system combined.
Another interpretation that uses it is decoherent histories you can read about here:
http://quantum.phys.cmu.edu/CHS/histories.html
http://www.math.rutgers.edu/~oldstein/papers/qts/node2.html
Although I like decoherent histories I don't formally hold to it because to my mind its a bit more complicated than is really necessary.
Thanks
Bill