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It is a way of saying someone is naive - if you were born yesterday, you are a baby with no experience. Usually people say 'NOT born yesterday' to indicate they cannot be fooled.
When people say, "I wasn't born yesterday," they're indicating that they do not believe a story/excuse made by someone else. They are saying that they can see past a given story and see what is really going on.
It means that you have had enough experience not to fall for whatever the other person is trying to make you believe.

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