Garner’s Usage Tip of the Day: ‘waiting in line; waiting on line.’
waiting in line; waiting on line. The former is the standard American English expression. The latter is a regionalism in the Northeast, especially in New York. Although some might think that it's the product of the computer age (i.e., being "online"), in fact it dates back to the 19th century.
This came up during the editing process for “Whitney.” My Minnesota-based publisher initially balked against using it but, to their credit, they did let it stand.