The correct definition of this expression is to really mess something up for yourself (rather than for someone else) with an unnecessary and/or stupid act.

The key is that it is self-inflicted and therefore has a different meaning to "piss on your bonfire" or "rain on your parade" which refer to generally spoiling or putting a dampener on something for someone else.

The origin of the expression is from the scenario in the UK of a guy buying some takeaway chips (french fries for any US readers) after an evening's drinking.

Finding that he then needs a piss on the way home, the inebriated guy finds a quiet spot somewhere then and puts his chips on the ground nearby while he relieves himself. In his drunken state he then accidentally pisses on his chips, thus depriving himself of his meal through his own carelessness and stupidity.

The expression is particularly applicable for a celebrity who has badly damaged his/or her career because of a needless personal transgression.
"Way to piss on your chips, Tiger!" (Overheard at the US Masters)
by DaleHudd June 15, 2010
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I don't want to piss on yer chips mate but I've already thrown one up 'er.
(In honour of Matt Ross)
by Cyrus & SFGTom November 11, 2003
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To piss on ones chips.

Applicable in the context of a internet discussion forum where impostering has taken place.
The impostering forummer then forgets to revert back to their personal moniker and makes a separate post which may or may not be such that their true identity is revealed.

See also: Pissage, Chips; POYC.
That massive cup Vegas just pissed on his chips.
by www.cupwinkcook.com/forum July 14, 2004
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