An exclamation used in awkward or uncomfortable situations.

The root "eel" is an onomatopoeic word from the natural sound one makes by becoming tense when uncomfortable. The suffix "sauce" is an English slang morpheme used to make a word or phrase more awesome.
The combination is a pun on the ingredient commonly found in sushi.
Friend: My mom sent me a care package at school, and there was a condom inside.
You: Eel Sauce!

Friend: I had sex with your sister last night.
You: Eel sauce.
by JessicaHope October 8, 2008
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usually used on sushi this sauce which millions have eaten is made up of the gooey brown stuff that comes out of an eels rectom.
RRR RRR. Yes good job jerking him now lets eat the eel sauce.
by vkp November 23, 2007
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