This is a forceful but casual way of saying "No!".

For example, if you strongly disagree with what a friend has said, you can use this phrase:

A: I think you're secretly in love with him.

B: No way! That's not it at all!

You can also answer someone's question with "No way!"

A: Would you ever consider going into law?

B: No way.

Another use of "No way!" is for communicating your surprise:

No way! Get out of here.