Derived from the word "owned" but is much cooler and more widely used.
It was created because of an idiot who can't spell "owned" (and so therefore he was pwned)
Speaker two: Yeah, that team got PWNED!!
This is a "teen word".. and for some of you to continue arguing over the origins... well, see my example below.
The word "pwned" comes from the word "owned" which comes from the word "own", which comes from the word... "cat".
GG n00b you got pwned