Create all possible combinations of items in a list using Linq and C#

var result = list.GroupBy(t => t.Id).CartesianProduct();

using the CartesianProduct Extension Method from Eric Lippert's Blog:

static IEnumerable<IEnumerable<T>> CartesianProduct<T>(
  this IEnumerable<IEnumerable<T>> sequences) 
{ 
  IEnumerable<IEnumerable<T>> emptyProduct = new[] { Enumerable.Empty<T>() }; 
  return sequences.Aggregate( 
    emptyProduct, 
    (accumulator, sequence) => 
      from accseq in accumulator 
      from item in sequence 
      select accseq.Concat(new[] {item})); 
}

---

Example:

var list = new[]
{
    new { Id = 1, Description = "Red"    },
    new { Id = 1, Description = "Blue"   },
    new { Id = 1, Description = "Green"  },
    new { Id = 2, Description = "Small"  },
    new { Id = 2, Description = "Med"    },
    new { Id = 2, Description = "Large"  },
    new { Id = 3, Description = "Cotton" },
    new { Id = 3, Description = "Silk"   },
};

var result = list.GroupBy(t => t.Id).CartesianProduct();

foreach (var item in result)
{
    Console.WriteLine(string.Join(" ", item.Select(x => x.Description)));
}

Output:

Red Small Cotton
Red Small Silk
Red Med Cotton
Red Med Silk
Red Large Cotton
Red Large Silk
Blue Small Cotton
Blue Small Silk
Blue Med Cotton
Blue Med Silk
Blue Large Cotton
Blue Large Silk
Green Small Cotton
Green Small Silk
Green Med Cotton
Green Med Silk
Green Large Cotton
Green Large Silk

Try using a cross join:

var combo = from l1 in List1
            from l2 in List2
            select new {l1, l2};