A Japanese mangling of the phrase "my wife"; when a otaku says, "______ is mai waifu," he is literally saying he wants said character to be his wife.

In the Western animé fandom, it has less extreme connotations (much like the word "otaku"); this generally refers to a fan's favorite female character.

The equivalent phrase for male characters is "mai husbando," though this is rarely used outside of the American animé fandom.
mai waifu