To make someone who's trying to seem important less important. Derives from the piss-boner men wake up with in the morning, it's a fake boner. If you took the piss away, there would be no boner. Do you see?
That's the original meaning, however taking the piss now means just giving someone a ribbing and in the most part not meaning to be malicious.
Guy 1: "Hey guys, what do you think to my awesome new haircut?"
Guy 2: "I think you look like a fucking prick, mate...you look like a real slob".
Other guys: "Haha, Guy 2 really took the piss out of guy 1!"
Meaning as it is now:
Guy 1: "Man, I only got a 45 on my last assignment"
Guy 2: "Haha that's fucking shit!"
Guy 1: "Don't be so mean"
Guy 2: "Cheer up man, I was only taking the piss"
Making fun of something or someone
Hey, Jim, you're fat.
No, I'm not!
Naw, you're not really fat; I was just taking the piss.
1) to do/say something without intent
2) to do/say something for the hell of it
Is Lola being serious or is she just taking the piss?
"hey bill, youre a fucking dick eater"
"dont worry mate, im justt taking the piss"
To appear serious, but actually meaning the opposite - most of the time. Usually followed up by the 'piss taker' (the one who joked) revealing he/she was only joking.
'Hey did I ever tell you you're fucking pug ugly?'
'No you didn't and that hurt'
'I'm only taking the piss. You fucking filthy mongoloid.'
Making fun of someone - without hurtful intentions.
My American fiance doesn't understand "taking the piss", so she took my piss taking seriously and now I'm in the dog house! :(
Making fun of someone, without intending to cause serious offence. Also known as 'pulling the piss'.
Ted: You suck at life.
Jimmy: Screw you!
Ted: Relax, I was just taking the piss.