List of rumors and urban legends about Mario
Being a long-running and popular franchise, there have been various rumors, misconceptions, and urban legends regarding fictional elements, production history, and gameplay elements within the Mario franchise.
Donkey Kong's name origin
There are several explanations for the name origin of Donkey Kong. According to the myth and its variations, Donkey Kong is a mistranslated, a typo, or a blurred fax from Monkey Kong. There is even an explanation that donkey is used to avoid copyright issues with King Kong. Monkey and donkey are, first, two completely different names in Japanese, so it is unlikely to be a translation error. While typos resulting in popular names do exist, the myth's multiple variations make this explanation dubious at best.
Another explanation is that Shigeru Miyamoto looked up the English variation of "stubborn" in the dictionary and found "donkey", although, normally, it would be unusual to find "donkey" lumped with other adjectives in the dictionary.
Shigeru Miyamoto himself has asserted multiple times that he used the word "donkey" from an English dictionary to convey stubbornness and stupidity. He had realized that the name was slightly odd after comments by people in the U.S., but he decided to stick with it because it was more memorable.
Mario and Luigi's last names
With the introduction of Luigi as Mario's brother, the pair began to be collectively referred to as the Mario brothers. Because of the title, many have been led to believe that Mario and Luigi's last names are actually "Mario". This was further pushed by the Super Mario Bros. Hollywood film released in 1993, which uses "Mario" as the brothers' surname. Several other isolated cases have also appeared that use the "Mario" last name, such as the Prima Games Mario Party 2 guide. Charles Martinet, Mario's current voice actor, also gave this as his response when asked about Mario's last name. However, various Nintendo employees and representatives, including creator Shigeru Miyamoto, have stated several times that Mario and Luigi do not have a last name.
Inspiration for the Super Mushroom
Shortly after the game Super Mario Bros. was released, rumors began to spread about the inspiration for the Super Mushroom. Many of these rumors suggested that the Super Mushroom was based on the the Psilocybin mushroom, which is a mushroom that contains the psychedelic drugs psilocybin and psilocin. The idea for Super Mushrooms was believed to have been inspired by the cake that Alice eats in the book Alice's Adventures in Wonderland that makes her grow after having been shrunk by a potion. This rumor was due to a misunderstanding during an interview with Shigeru Miyamoto, who later corrected this information, saying that the mushrooms were actually inspired by the concept of mushrooms being associated with magical worlds. 
In the original English localization of the Super Mario Bros. instruction booklet, the Super Mushroom was called "Magic Mushroom", but the name was reverted to the Japanese version in order to avoid association with hallucinogenic mushrooms such as the Amanita muscaria mushroom, and the Psilocybin mushroom, both of which often go by the nickname of "Magic Mushroom", The Amanita muscaria in particular has a similiar design to the Super Mushroom.
Gunpei Yokoi's departure
It is frequently said that the poor commercial performance of the Virtual Boy caused Gunpei Yokoi to leave Nintendo, with variations claiming Yokoi left "out of shame" or was otherwise demoted by Nintendo prior to his departure. One article goes as far as to claim that the Virtual Boy was somehow indirectly responsible for the car incident that killed Yokoi.
However, in an interview made for the book Nintendo Magic, a business partner of Yokoi, Yoshihiro Taki, stated that he had long planned to retire from Nintendo and would've done so regardless of the Virtual Boy's performance. The biographical book 横井軍平ゲーム館 provides a similar explanation, stating Gunpei Yokoi had grown cynical about the video game industry and that the Virtual Boy actually delayed his departure, as he decided to design one last successful product (the Game Boy Pocket) as to not look like he was parting on bad terms.
Larry Koopa's namesake
Several articles (such as this one by the British Official Nintendo Magazine) purports that Larry Koopa is named after the talk show host Larry King, perhaps due to the writer's inability to think of a famous musical "Larry". According to former Nintendo of America employee Dayvv Brooks, however, Larry is also named after a musician like his siblings: in this case, Larry Mullen, Jr., the drummer for the rock band U2.
In December 2007, a video showing a downloadable, Nintendo DS version of Super Mario Galaxy emerged. The footage showed Mario and Luigi jumping from the Wii to the DS using a previously unknown, hidden galaxy unlockable after collecting every Power Star as both Mario and Luigi and the DS' Wi-Fi download capabilities and both brothers together in the game's galaxies, implying a co-op mode. The video also stated that each DS star collected would be redeemable for 10 Wii points. When asked about this, Nintendo stated that they do not comment on rumors. A slightly shorter, more stable version of the same footage was later posted on the video-sharing site Stage6 by user psycho3ler. It was shown to belong to Pablo Belmonte, a video editor behind a "Nintendo ON" hoax video posted in 2005. The extended footage on Stage6 even shows a Nintendo ON-shaped planet.
Super Mario FX
A common rumor states that a 3D platformer named "Super Mario FX" was in development for the SNES, which would have used the Super FX chip to display 3D graphics. Variants of this rumour claim that the game became or was otherwise the inspiration for Super Mario 64.
As elaborated in this SnesCentral article, there is no actual proof that such a game was in development (which would have been unlikely due to the timetable of Super Mario 64's development), and claims of its existence seem to originate from IGN misinterpreting an interview in the January 1996 issue of Nintendo Power, where Shigeru Miyamoto stated he got the idea of developing a 3D Mario platformer (without specifying platform) while developing Star Fox, a game released on the SNES that used the Super FX chip. Furthermore, said article's writer contacted Dylan Cuthbert (a game programmer who designed the Super FX chip and collaborated with Miyamoto on Star Fox), who confirms that no 3D Mario platformer was in development for the SNES and that "Super Mario FX" was actually a codename for the chip itself.
It is commonly claimed among online fans that Ashley is 9/10-years old in Japanese WarioWare material and that her age was "changed" for the western localization. The claim was featured for a time on the wiki's Ashley and Red page, although it was later removed for being unsourced.
While there are hints that Ashley is meant to be younger than 15-years old (such as her voice and Ashley referring to herself in the third person in her Miiverse Sketch Masterpiece Collection video, a verbal tic that usually denotes young, immature characters in Japanese media) she has no specific stated age in any Japanese WarioWare media, including the official Japanese WarioWare: Touched! website.
A popular rumor has that an unspecified UK Nintendo magazine issue once joked that Bowser's wife is named "Clawdia Koopa". However, despite the rumor's popularity, no scan or direct quotation of the statement has surfaced. Furthermore, most sites making this claim attribute it to "Nintendo Power UK", a publication that does not exist in that region.
The idea that Bowser has a wife named Clawdia Koopa likely originates from the Mario fansite Lemmy's Land. Lemmy Koopa, the webmaster, created an original character named Clawdia to play the role of Bowser's wife in his fanfiction. She appeared on the site as early as 2002. As Lemmy Koopa has always been open about Clawdia being his original character, it's most likely that a third party started the "Nintendo Power UK" rumor.
King K. Rool's costumes are separate characters in Japan
King K. Rool's trophy description in Super Smash Bros. Brawl states that "His brother, Kaptain K. Rool, made an appearance in the game Donkey Kong Country 2: Diddy's Kong Quest". This lead to several fans wondering if this was a change in the Japanese localization, which, due to the broken telephone effect, was morphed into a "fact" that King K. Rool's disguises are separate characters in Japan.
In truth, Japanese material for the Donkey Kong Country series also have K. Rool's aliases being mere disguises, and thus the trophy description is merely an error. Furthermore, several of Super Smash Bros. Brawl's trophy descriptions features errors about the subject they describe, including ones about games director Masahiro Sakurai worked on, an example being Kirby's latest appearance, which was actually Kirby: Squeak Squad, was listed as Kirby: Canvas Curse.
Luigi in Super Mario 64
One of the most famous rumors surrounding Super Mario 64 is that Luigi is available as a secret playable character, often citing a statue with small characters that purportedly spelled "L is real 2401" as proof, (though the characters can also be read as "Eternal Star"). Many theories regarding the meaning of the "L is real 2401" message were circulated, such as doing 2401 laps around the statue in order to make Luigi appear. After receiving several fake methods, the review site IGN eventually offered a $100 (US) reward for an authentic method of unlocking Luigi, but as the staff suspected, Luigi's inclusion in Super Mario 64 was a myth, and no proof to the contrary was forthcoming. Nintendo itself acknowledged the rumours in the 1998 April Fools' issue of Nintendo Power, which stated that it would discuss the "L is real 2401" message on the non-existent page 128.
While his presence in the original Super Mario 64 was nothing more than a rumour, Luigi was eventually playable in the remake, Super Mario 64 DS.
Waluigi in Super Mario 64 DS
In 2007, rumors about Waluigi appearing in Super Mario 64 DS started, similar to the original Super Mario 64 Luigi rumours. Many fans even suggested that the original "L is Real 2401" statue would be involved in accessing Waluigi in the sequel, and various fake ways to unlock him were put forth.
One of the more popular pieces of evidence was a fake magazine scan titled "Purple Prizes." It stated that Waluigi could be unlocked by collecting every Power Star and becoming "the fastest foot racer in the land", then triggering a hidden switch to reveal his door and defeating the "Rabbit King" to collect the key; the page also described his standard and Power Flower abilities. The "scan" was created by Andrew Brown, who edited a custom-made Waluigi model into game screenshots and posted the image onto his DeviantART account as well as some small gaming forums as an April Fool's joke in 2005, though it quickly spiked in popularity. Some began to state that the image has been posted onto IGN and that the "scan" was from an issue of Nintendo Power.
Laser Suit in Super Mario World
In late 2006, a video was posted on YouTube showing off a secret exit in the Top Secret Area reached by leaping into a "Warp Pipe" between the two left question blocks. Said warp would take the player to a hidden goal, which would in turn lead to a level on the island above called "???". In this level is a Hint Block containing a congratulatory message from the Nintendo staff presenting the Laser Suit, which would have the properties of the cape and allow Mario to shoot lasers. The suit was actually created by Super Mario World hacker KPhoenix, who made the level and added the message "so people would be fooled on Youtube.".
Luigi's hanged shadow
In the game Luigi's Mansion, the player must go to the Telephone Room after beating the Boss Battle of the Area 3. Within these calls, the player must have Luigi holding the the phone and wait until a lightning strikes: Luigi's shadow appears to be much different from Luigi itself that it seems he has been hanged. After being noted, some speculation began to show up: some people think the shadow indicates that Luigi is really dead. Others have suggested that Luigi's Mansion was in production a more violent and dark game than the final product.
The shadow is most likely a result of the camera angle and the lighting properties: when Luigi phones, the camera slightly changes its position, angling up and zooming in. Since the lightning "strikes from the camera", the shadow is actually misplaced. The shadow matches Luigi's pose; one of his supposed arms is actually the tube of the Poltergust 3000, where the "rope" around Luigi's neck is the flashlight and the Game Boy Horror; the idea that he is being "hanged" based on the silhouette is possibly a case of pareidolia that matches the game's dark themes.