A saying that has existed for a long time, but wasn't extremely popular until it became famous through the Pirates of the Caribbean ride at Disneyland, in which a pirate-ish skull and crossed
bones on the wall utters this very phrase, among other things. Basically, what it means is that to keep something quiet,
kill anyone who knows about it and, since that
person is dead, it would be pretty much impossible for them to tell your secret. A similar saying is "Three can keep a secret if
two are dead," invented by Benjamin Franklin.
So, you
don't want anyone to find out that you're secretly a Hilary
Duff fan? Just
kill everyone who already knows--after all, dead men tell no tales.