Lamb blood is the blood of a lamb.
In the Fantasy Universe of What Is And What Should Never Be, Dean arms himself with a silver knife from his mother's silverware and is able to get a jar of lamb blood to use on the djinn he is hunting. The Fantasy Universe Sam is horrified to see the blood and to learn of Dean's beliefs about the djinn. Upon realizing the truth, Dean wakes himself up by stabbing himself with the knife he has dipped in lamb blood in anticipation of killing the djinn.
In the real world, Dean is found by Sam who is armed with a knife dipped in lamb blood. During the fight that follows, Dean kills the djinn with Sam's knife.
In Exile on Main Street, while hunting Brigitta and her brothers, the Winchesters arm themselves with knives dipped in lamb blood. While they never get to use them, Samuel Campbell kills one of the djinn with a knife of his own and threatens Brigitta with it as a distraction so that Christian can capture her.
In Pac-Man Fever, after realizing that they are dealing with a bastard off-shoot of a djinn, the Winchesters once more arm themselves with silver knives dipped in lamb blood. Dean is able to kill Jennifer O'Brien in this way and Sam her son.