One way of saying "I am a cat" in Japanese. Made famous by Natsume Soseki's novel of the same name.
The book, told from the perspective of a pompous cat, is a satirical commentary on the meiji period. In particular it deals with the intellectuals of the period and the rapid westernization of Japan. (disclaimer: I haven't read it; my Japanese is not that good yet)
If you only knew a bit of Japanese, you would probably say "watashi wa neko desu" instead. "Wagahai" is a slightly arcane form of "I" (other forms, with varying implications are watashi, watakushi, atashi, ore, boku, ware...). 'De aru' is a version of the copula slightly politer than 'desu', used in "Ronsetsu-tai" (formal written japanese).