"Jōdan" means "joke". So, you can say "jōdan desu", "jōdan dayo", "Jōdan yo" to say "I'm kidding," or tell someone "jōdan desyo?", "jōdan iwanaide" to mean "kidding, right?" or "Don't be ridiculous". You can use this when you express your disbelief, such as, "Jōdan desho, sinjirarenai! (No kidding, I can't believe it)."
EXAMPLES
kidding/joking (cannot believe)
Grace
たからくじ で ひゃくまんえん あたったよ!
(Takarakuji de hyakuman en atatta yo.]
(I won 1 million yen lottery!)
じょうだんでしょ?
(Jōdan desho?)
Keiko
(You must be kidding right?)
Kidding/joking (ridiculous/no way)
Grace
あした、てすとだって!
(Asita, tesuto datte!)
(We'll have a test tomorrow!)
ええええ!?じょうだんでしょ?
(Eeeeee!? Jōdan desho?)
Keiko
(Whaaaaat!? No way!/Cannot believe it/Ridiculous!)
A tip
When you want to deny what you just said, you might be able to get away by saying "Jōdan desu."
When your joke is too much/ridiculous, you might hear "じょうだん きつい!(Jōdan kitui!!)" which means "that's too much."