To pull one’s leg means to tease or lie to someone as a joke. This is commonly heard as a question (e.g., Are you pulling my leg?). Or it is also said as a statement when the joker wants to end the joke (e.g., I’m just pulling your leg.) The verb pull may be conjugated through all tenses as normal.
The phrase is always used in the playful sense and does not carry a pejorative connotation at all. It does seem the phrase is enjoying slightly more popularity outside the United States than inside, but that may just be in print instances.
As with many phrases, the origin is unclear and without evidence. Popular myths include adding weight to executions and thieves tripping people to rob them, but neither story has validity. The earliest usage was in the late 1800s, and was in fact an explanation of the phrase, which suggests it was newly coined. Another reason any story referencing the medieval times shouldn’t be believed.
Examples
She said: “The councillor phoned me and started talking about pot holes and I thought he was trying to pull my leg.” [The Telegraph]
“He (Ghatpande) even pulled my leg, saying you’ve left your gods and are leaning towards us,” she says. [New Indian Express]
But he was always good-natured about it and was the first to laugh when he figured out somebody was pulling his leg. [The Des Moines Register]
Shah Rukh pulls her leg about her not being able to remember how many pigeons there were and gets mock beaten up by Farida Jalal. [India]