That’s what she said is a joke phrase normally used in response to something that came off as sexual, whether purposely or not.
It’s a sexual innuendo; a hint or insinuation about something of sexual nature.
If your friend says something in an everyday conversation that could, in one way or another, have been said in the bedroom as well, you abruptly say “that’s what she said”.
It is important to remember that to use “that’s what she said”, it must be something that would come from a woman, as opposed to “that’s what he said”, which would come from a man.
Friend: “It’s so hard!”
You: “That’s what she said!”
The phrase is traced back to 1973, in the book “Egospeak: Why No One Listens To You”, where the phrase is described as “the cheapest shot of all”.
Precursors to this modern slang phrase are “said the actress to the bishop”, originating from early 1900’s, and “said the girl to the soldier”, stemming from around the 50’s.
Both have been used in similar contexts as “that’s what she said”.
In the 1992 comedy film Wayne’s world, character “Wayne” (Mike Myers) says the phrase as a response to his sidekick “Garth”.
The interaction goes as follows:
Garth: “Hey are you through yet? Cause I’m getting tired of holding this.”
Wayne: “That’s what she said.”
The phrase was also used multiple times on Saturday Night Live.
It has over time become a well used caption for memes and web comics, the first one being shared in 2006 by Xkcd.