Origin
It is found in print in the play Christmas Prince, which was first performed at Cambridge, around 1608.
Explanation
It is said to emphasize that the person who has control of a situation in the end is most successful, even if other people had seemed originally to have an advantage. You may laugh now, thinking you have won, but you may not prevail in the end.If someone does something nasty to you, that person may feel satisfaction, but you will feel even more satisfaction if you get revenge on that person. Whenever one is happy, he laughs. Success always brings happiness. But unless you are certain that success is yours, it is out of place to laugh. In a game or a match, only in the end you can say who has actually won. Sometimes, at first victory seems to be on your side and you will be tempted to laugh at your opponent. But as the game is not yet finished, your rival also stands an equal chance of winning. In other words, you must not be in a hurry to come to conclusions. You must be patient and wait till success is undoubtedly on your side. When there is no room for doubt as to who the winner is, you can always laugh freely. In fact, it is the right and ripe time to laugh. In other words, if you want to laugh best, you must be prepared to laugh last.
Example
Joe pulled a dirty trick on me, but I’ll get him back. He who laughs last, laughs best.
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