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Sarcasm is like jazz—you know it when you hear it. That’s because sarcasm is primarily communicated by tone of voice, which is used to mean the opposite of the literal words. You can tell by a speaker’s tone that, “Well, that’s exactly what I need right now,” means that’s exactly what’s not needed.

Response #1: Answer them literally. Sarcasm is supposed to be a joke—a joke that covers contempt or jealousy, but a joke nonetheless. And what’s worse for the joker than having the joke fall flat? So when faced with, “That new boyfriend of yours is a real winner,” or “Mmmm, love this home cooking!” respond to the content, not the tone. Respond with the opposite of sarcasm: sincerity. “Great, I’m so glad you like him—let’s all get together,” or “Awesome, how about seconds?” When they’re forced to explain, “Well, actually, that’s not what I meant,” it gets awkward, but you’ve inoculated yourself against further attacks.

Response #2: Ignore them (and maybe throw some compassion their way). This works best for strangers who yell “Nice driving!” or the equivalent. Folks willing to put time and energy into putting down total strangers are pretty miserable and want you to feel as lousy as they do—feel some compassion for them and move on.

Response #3: Give some free advice. Sarcasm comes in different flavors. Some folks are sarcastic to make fun of an absurd world. They’re laughing with you, or even at themselves. That’s fine—leave them be.

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-Ellen Hendriksen, PhD

Source: Savvy Psychologist : How to Deal with Sarcastic People : Quick and Dirty Tips ™