When do you say that?
It's not happening. Does it mean "This is not real. or This can't be real."?

Question

When do you say that?
It's not happening.    Does it mean "This is not real. or  This can't be real."?

Answer

You mainly say this when someone wants you to do something, but you refuse to do it.

For example:

Friend:  Hey I need to borrow $500 to ___(do something stupid)___.

You (laughing at him):  Yeah...um... that's not happening.

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You can also use it when someone had been told something would happen but now it's not.

Friend:  John said he was going to take care of everything.

You:  Well, it's not happening.

Answer

Two meanings, one of which is the meaning that you give it: 
If A has already happened, but nobody expected it or it is considered to be something awful, people would express disbelief: 
"The opening act just phoned. Their flight got cancelled." "This is NOT happening!" 

If A has not happened and I wish to say that it will not be allowed to happen; 
"Our daughter wants to stay at an overnight party with boys." 
"Well, it's not happening. Tell her no."

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