It's not known with full certainty who Hitler's father's father was (although George Hiedler is the generally accepted one). For a list of theories on the matter, see the Wikipedia article about Alois Hitler.
Since Hitler's father's mother got pregnant while allegedly working for a Jewish family it has been claimed that the father is actually the 19-year old son of this Jewish family. That would make Adolf Hitler one quarter Jewish according to the race laws in Nazi Germany.
However, there is not a smidgen of evidence for this theory. It has become popular because of the immense potential for irony, should it be true. But it probably isn't.
Source: Frank McDonough, _Hitler and the rise of the Nazi Party_ , Pearson Education, 2003, p. 20.