It's a saying. It refers to the impossible task of pulling yourself off the ground by pulling on your shoelaces, or something similar. Even though it's an impossible task, people use this phrase a lot when talking about "doing the impossible" all by themself.

I kind of agree with Kiwi, except for the part about the task being impossible. It is generally used just to mean achieving a difficult task, or improving one's situation in life without help from others. Ex: "When I was a kid, there were no social services or handouts. I had to pull myself up by my bootstraps." (This assumes the person saying this is now in a better situation).

Thanks Kiwi!