a joke only understood by an exclusive group of people.. usually they are used to annoy/leave out/embarrass/show off, to outsiders who don't undertand
John: "hahahha!! remember!!??! do you want fries with that??"
Jane: "oh my god!! HAHAHAH! we are so funny, that's a great inside joke!!"
Outsider: *aw i don't get it.. i feel so left out*