From Wikipedia : The term derives from Black English Vernacular (Ebonics) as a deliberate misspelling of the word fat. Fake etymologies for "phat" state that the word originated as an acronym for "Pretty Hot And Tempting", "Plenty of Hips And Thighs" or "Pussy, Hips And Tits". From wordorigins.org : Phat is another word that frequently is given an acronymic origin. The exact acronym varies with the telling, Pretty Hot And Tempting, Pretty Hips And Thighs, and Pussy Hips Ass Tits have all been suggested. There is no evidence supporting any acronymic origin. Rather, phat is most likely simply a slang respelling of fat. Such respellings are common in slang. And fat has a long history of meaning rich, abundant, or desirable. Fat has been used this way in English since the early 17th century, and in other languages for far longer. The specific sexual connotation of phat is likely just a specialization of the general meaning. Some suggest it may be a clipping of emphatic. Again, there is no evidence for this last, but at least it's more plausible than any of the acronymic origins. Phat is also older than you might think. It has been a staple of African American slang since at least 1963. That's two versions - very similar. Hope it's useful.

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I think it may have started to become popular after the movie "Money Talks" in 1997 starring Charlie Sheen and Chris Tucker. "Franklin Hatchett: You're phat. Grace Cipriani: Excuse me? Franklin Hatchett: You're phat. P-H-A-T. Pretty Hot And Tempting." I remember this part of the movie got a lot of play on the commercials for the movie, and I remember it being the first time I'd heard it.

of a very high quality or standard ( slang ) http://encarta.msn.com/encnet/features/dictionary/DictionaryResults.aspx?refid=1861739632 hip-hop slang, "great, excellent," 1992, originating perhaps in the late 1980s and meaning at first "sexiness in a woman." The word itself is presumably a variant of fat (q.v.) in one of its slang senses, with the kind of off-beat spelling preferred in street slang (cf. boyz). The spelling is attested as far back as 1678, as an erroneous form of fat (a classical over-correction; see -ph-). This spelling is said by some to be an acronym, but various versions are given: "pretty hot and tasty," or "pretty hips and thighs" among them. These, too may have been innovations given as explanations to women who felt insulted by the word. http://www.etymonline.com/index.php?term=phat Phat is a slang spelling of fat, originating and common among African-Americans. It has come to the attention of standard English speakers relatively recently, but like many such slang terms of a subpopulation it is much older than those outside of the subgroup. http://www.wordorigins.org/index.php/search/results/02d96a2a71cc6e889063be5af2130f83/

The word "Phat" is actually a name. It is popular is Asian countries. Trust me, my boyfriend's name is Phat! He is from Vietnam.

Perhaps the word, Phat," comes from the term "phatic," which in linguistics refers to social interaction/ communication as greetings. Perhaps this has been shortened to the "phat," and refers to social communicative interaction.