Paltrow was promoting her new cookbook, 'My Father's Daughter', on late night talkshow 'Chelsea Lately', when she and host Chelsea Handler began swapping family tales, The Sydney Morning Herald reports.
The two women discovered that they both called their grandmothers "mutti", the German for "mummy".
Lately first observed that: "My mutti was a real bitch."
Paltrow then shocked the audience by saying: "My mutti was a real c***."
Paltrow, who is married to Coldplay star Chris Martin, told Handler her grandmother "just hated my guts, basically".
"She tried to poison my mother against me, but it didn't work, because I have a great mother," she said.