I read about the 1995 Lamb-Paczynski debate on whether GRBs are galactic or extragalactic in origin. With our current experimental evidence, have we found whether GRBs are galactic or extragalactic?
Based on our understanding of what might be possible causes for GRB, there's nothing to suggest that this phenomena is isolated to other galaxies alone, but we have so far only detected GRB originating from outside of the Milky Way. Good that we did too, because if any of them happened in our cosmic neighborhood and was pointing towards us, it would be the last thing we'd ever see and would effectively sterilize our planet. More information is available on Wikipedia on Gamma-ray burst, it's actually a pretty good article presenting extensive information on GRB (I guess that's why it's featured there).
Shortly after their discovery, astronomers realized there were at least two classes of GRB: short events (<2 seconds) and long events (>2 seconds). The long GRB are widely believed to by hypernova, the explosions of massive black holes in very distant galaxies. In fact, they are much further away than even Paczynski and his followers believed at the time of the debate. Consensus on short GRB has yet to be reached, though the neutron star-neutron star merger theory, no longer applicable to long GRB, is still in play for the short ones. Also, some small percentage of short GRB are certainly magnetar flares (such as the famous March 7, 1979 event) but in other nearby galaxies.