This quote was uttered by Tybalt to Benvolio in Act I Scene i of the play. Tybalt is of the Capulet household (Juliet's family) and Benvolio is of the Montague household (Romeo's family) and this insult comes at the beginning of the play as members of these families start a brawl in Verona.
It is worth considering the speed at which the conflict escalates: the henchman are engaging in witty, sexual dialogue, which links violence and sex, and then before they know it are involved in a brawl that rapidly grows until the heads of both households are present and involved. Benvolio (whose name literally means "good will") tries to stop the conflict but is drawn into the fray by fiery Tybalt, which perhaps foreshadows the way that violence is so powerful in this play that it draws in characters in spite of their best intentions - for example, Romeo killing Tybalt later on in the play. This is a scene that is captured brilliantly in the Baz Lurman version of the play, when Romeo kills Tybalt whilst at the same time showing that he is forced into this situation. Violence begets violence in this play with no conceivable escape.
This is a quote by Tybalt in Act 1, scene 1 of “Romeo and Juliet”. In the very beginning of the play, servants of the Capulet house and those of the Montague house are arguing over which family is better. The servants of the Capulet house (Sampson and Gregory) begin a sword fight with those of the Montague house (Abram and Balthazar). Eventually, Tybalt and Benvolio become involved in this dispute. While initializing a brawl between the two families, Tybalt says this to the Montagues that are present – Abram, Balthazar, and Benvolio. Tyblat actually says this quote in response to Benvolio who is trying to put an end to the fight when he says,
“Part, fools! Put up your swords. You know not what you do… I do but keep the peace. Put up thy sword, Or manage it to part these men with me.” (A. 1, s. 1)
Tybalt’s response – the quote that you are asking about – begins the brawl that gets the families into trouble with the Prince.