This line is uttered by Teiresias at the end of the first scene of the play. Oedipus has been pressing Teiresias to tell the truth about the plague on Thebes and its cause.
Teiresias is resistant and initially speaks vaguely and mysteriously. Oedipus finally insists on hearing more of the truth and Tiresias directly accuses Oedipus of being the cause of the troubles in Thebes.
Teiresias initially identifies Oedipus as being blind to the crimes he has committed.
"But I say that you, with both your eyes, are blind:/You cannot see the wretchedness of your life,/Nor in whose house you live, no, nor with whom."
However, at Oedipus urging, Teiresias begins to help Oedipus see that he is actually the very man that he has been looking for, the murderer of Laius and the source of the plague on Thebes.
Earlier in the scene, Tiresias hints that someone present with he and Oedipus will one day curse Oedipus just as Oedipus has been cursing Tiresias for his recalcitrance. In suggesting that the man Oedipus has been seeking is a Theban.
In the lines quoted here, Teiresias says that the man sought is believed to be foreign born, but will turn out to be a native Theban. This applies to Oedipus. Oedipus believes that he was born elsewhere, but was actually born in Thebes and sent away because of the prophecy, his doom, which stated that he would kill his father and marry his mother.
This is why Teiresias adds that the revelation that the man Oedipus seeks is a native Theban is:
"a revelation that will fail to please."
Not only does Teiresias place the blame for the plague on Thebes squarely on Oedipus, he also suggests that Oedipus has fulfilled the doom he attempted to avoid. By stating that Oedipus is Theban, Tiresias begins to make clear the fact that Jocasta of Thebes could be Oedipus' own mother.