It is an exclamation of disbelief or surprise at someone's lie, often used in a playful or affectionate way. The phrase is often accompanied by a gesture like shaking one's head or a playful roll of the eyes.
Here are some other ways to translate it depending on the context:
* "You're such a liar!"
* "Oh, you're full of it!"
* "You're kidding me, right?"
* "Come on, you're making this up!"
The phrase is common in Latin American Spanish, particularly in Mexico and other countries where the language is spoken with a more relaxed and informal tone.