Print dictionaries
I expect it's much older, but "Shut up!" expressing disbelief is defined in the following US slang dictionaries from the 2000s.
First, A Concise Collection of College Students' Slang (2004) by Xin-An Lu:
Shut Up (interj): 1. expression meaning to be quiet; often given as a command. Shut up! Do you ever stop talking? 2. phrase expressing surprise or disbelief. You really got tickets to the concert? Shut up!
The preface details the source:
All contributors to this work are young college students in my Spring classes, 2004, at Shippensburg University of Pennsylvania.
Next, The Little Hiptionary: The Slanguage Dictionary That Tells It To You Straight Up (2007) by Ruth Cullen:
shut up interj 1: an expression of incredulity or disbelief meaning “no way” or “you've got to be kidding me” You won the lottery and you're moving to Hawaii? Shut up! 2: a phrase that means "be quiet," to "shut your mouth" Would you all kindly shut up? I'm trying to watch the news.
Finally, Barron's American Slang Dictionary and Thesaurus (2009) by Mary Elizabeth:
Shut Up!2 |shut UP| excl Initial expression of disbelief in what one has been told, but often suggests that the hearer is open to convincing. USAGE INFO: This use of shut up, if said with appropriate tone and body language, will not cause offense.
Interesting to see that it's the second definition in 2004 and 2009, but the first in 2007.
Online dictionaries
The earliest definition with this meaning on Urban Dictionary is from May 2003 and currently the third most popular:
Expression of incredulity. Similar to "no way" or "Wow, I can't fucking belive it"
What? My lazy ex got a job? Shut up!
by bob May 20, 2003
The Online Slang Dictionary (American, English, and Urban slang) also has it from January 2003, although it's since been edited:
shut up
interjection
- used to indicate surprise or doubt.
You're 29 years old, Robbie? Shut up! You don't look a day older than 23!
Last edited on Jul 24 2011. Submitted by Anonymous on Jan 09 2003.
Earlier examples
Of course, for dictionaries to include a term, it had to have already been in use. The Wall Street Journal reported about this use on May 1, 2003 in "Amused? Want to Hear More? One Term Says It All: 'Shut Up!'" reported on its mainstreaming and sheds some more light on its origin. Some extracts:
Not too many years ago, the unrude use of "Shut up!" might have baffled linguists and just about everybody else. But the term has now made its way from schoolgirl chatter to adult repartee and into movies and advertising. People use it as much to express disbelief, shock and joy as to demand silence. In some circles, it has become the preferred way to say "Oh my God!" "Get out of town!" and "No way!" all at once.
...
Shut up! is the latest example of a linguistic phenomenon called amelioration, whereby a word or phrase loses its negative associations over time. A classic example is "nice," which meant "stupid" up through the 13th century. Recent flip-flops include "bad" (as in good) and "dope" (as in great). "Words that were once considered rude are now included in regular conversation, but in a context that lets you know it's not impolite," says Connie Eble, professor of English at the University of North Carolina at Chapel Hill and the author of "Slang and Sociability." "They become so generalized that the shock value wears off."
Words with rich semantic connotations "typically have the possibility to mean their opposite when used in an ironic or joking context," adds Bert Vaux, an associate professor of linguistics at Harvard University.
...
More recently, children's author Meg Cabot has given the phrase a literary twist. Her title character in "The Princess Diaries" favors it to express geeky teenage delight. Disney screenwriters were so fond of the princess's breezy use of the term that they wove it prominently into the movie adaptation. "Shut up!" even landed in the promotional trailer for the film. "I've had a lot of letters from parents thanking me sarcastically for introducing 'shut up!' to their kids' vocabulary," says Ms. Cabot.
The origins of the newest usage have fueled some debate. Ms. Cabot says she picked it up a few years ago from schoolgirls on Manhattan's Lower East Side. An earlier adopter of the phrase was the character Elaine on "Seinfeld." In a 1992 episode written by Larry David called "The Pez Dispenser," Jerry tells a story about a man who splashed Gatorade on his head, got pneumonia and dropped dead. Elaine responds: "Shut up!" In subsequent episodes, Elaine tells people to "Shut up!" all the time -- but she really means it. Writers had her intone the hip version just twice, according to Paul McFedries, a language writer and founder of the online site "The Word Spy" who has studied the complete body of Seinfeld scripts.
The Princess Diaries film was released in August 2001 and was based on the first The Princess Diaries book, published in October 2000.
Here's an extract of "The Pez Dispenser" from Seinfeld, first broadcast on January 15, 1992, showing the story continues even after the ironic "Shut up!":
JERRY: You know I thing Kramer might have been responsible for getting Richie involved with drugs in the first place.
ELAINE: What? How?
JERRY: A few years ago the comedy club had a softball team. Kramer was our first baseman You couldn't get anything by him. It was unbelievable. Anyway this one game we came back to win from like 8 runs behind. So Kramer says to Richie why don't you dump the bucket of Gatorade on Marty Benson's head? The club owner. So Richie goes ahead and does it.
ELAINE: So? What happened?
JERRY: What happened? The guy was like 67 years old, it was freezing out, he caught a cold, got pneumonia, and a month later he was dead.
ELAINE: Shut up!
JERRY: All the comedians were happy. He was one of these club owners nobody liked anyway. But Richie was never the same.
ELAINE: What about Kramer?
JERRY: He's the same!
You can watch the scene here, starting from around 10m20s.