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that's what he said

A statement used to draw attention to a phrase that could be interpreted as sexual innuendo. This interjection is used when someone, usually a female, unintentionally makes a sexual comment. The "he" is typically assumed to be the girl's boyfriend.

The inverse use that's what she said was made popular by the hit TV show The Office.
Scenario: Two girls are getting out of the pool and going to grab towels to dry off...

Girl 1 (while picking up towel): Wow, that's ones really wet!
Girl 2: That's what he said.

That's what he said

Person 1: Wow! That is very long!
Person 2: That's what she said!
Person 1: Well, that's what he said.
Person 2: ... You son of a-
That's what he said by jkiszg November 11, 2010

That's what he said

The same as that's what she said, except when girls say it
girl 1: wow, there smaller than i expected!
girl 2: that's what he said!
That's what he said by :D:D:DOMG August 14, 2008

That's what he said!

That's what she said, only the opposite. Very often used when referring to gays.
That's what he said! by UchihaDrew618 September 14, 2009

That’s what he said.

Apparently, “That’s what he said” means exactly the same as the popular sexual pun, “That’s what she said”, but with a masculine personal pronoun.

This phrase can be used when talking about one’s sexual engagement with a guy. It can be manipulated almost anywhere and everywhere to make seem even a simple dialogue or a sentence, sexual.
For example,

Philippe: “Have you tried that new recipe in an oven?”
John: “Yeah, but it was so big that I could not fit it in.”
Philippe winks: “That’s what he said.”

That's what he or she said

A response to a phase that can be interpreted as sexual innuendo said by either the male or female in a sexual relationship.
Girl 1: Wow, there smaller than I expected!
Girl 2: That's what he or she said!