to engage in coitus. Origin: the Ojibwe natives in Minnesota. The Ojibwe have a phrase "Poonjegay" which means "to dipmeat in grease." Among the teenagers there, it's shortened to "Poonj" and has become slang for sex.
"Hey, did you two poonj last night?"
"Were you guys poonjin?"
internet slang. it really more fo a joke to poke fun at all the acronyms used in chat room talk. A variation on LMAO, it means "laughing my fucking ass off mother fucker"