Snape was a unpopular kid when he attended Hogwarts, and was always bullied by Harry's father. His mother also attended Hogwarts, and was a pure-blood with the last name "Prince". Snape's father was a muggle, so when Snape was born, he was a half blood. The kids who bullied him called him "The Half-Blood Prince", and that is what he was known as. More @Wikipedia
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