The g-word began as slanderous term for lower-class Italian-Americans, but the youth of New York and New Jersey embraced the term and made it their own in the 1970s.
Dr. Donald Tricarico, a sociology professor at the City University of New York, points to Saturday Night Fever as the movie that supplied the guido myth. Working-class Italian-Americans found an escape in underground dance clubs of the '70s. They created the leisure-meets-greaser look by maintaining their cultural identity while adding American status symbols.
Today's definitions range from "Italians who conduct themselves as thugs with an overtly macho attitude" to "a pejorative word to depict an uncool Italian who tries to act cool" to "a good-looking Italian guy" (compliments of Mike "The Situation" Sorrentino).
Probably the best explanation of "guido" is borrowed from Italian. Fred Gardaphè, professor of Italian-American studies at Queens College, points to the idea of bella figura. "It basically means, to put on a show so people don't know the real you," he said. "If you're poor, you make them think you're rich. If you're rich, you make them think you're poor."
Source: Flickr User Annie Mole