The song was written in 1895 by Banjo Paterson, a famous Australian poet, and the music written (or possibly adapted) by Christina MacPherson. Banjo Paterson wrote the piece while staying at the Dagworth Homestead, a bush station in Queensland. While he was there his hosts played him a traditional Celtic folktune called the Craigeelee, and Paterson decided that it would be a good piece to set lyrics to, producing the song during the rest of his stay.
The tune is most probably based on the Scottish song "Thou Bonnie Wood of Craigielea" which Christina MacPherson heard played by a band at the Warrnambool steeplechase. Robert Tannahill wrote the words in 1805 and James Barr composed the music in 1818. In 1893 it was arranged for brass band by Thomas Bulch. The tune again was possibly based on the old melody of "Go to the Devil and Shake Yourself" composed by John Field (1782-1837) some time before 1812. It's sometimes also called: "When Sick is it Tea you want?" (London 1798) or "The Penniless Traveller" (O'Neill's 1850 collection).
There is also speculation about the relationship it bears to "The Bold Fusilier", a song dated by some back to the eighteenth century.
"Waltzing Matilda" is probably based on the following story:
In September 1894, on a station called Dagworth (north of Winton), some shearers were in a strike that turned violent. The strikers fired off their rifles and pistols in the air and then set fire to the woolshed at the Dagworth Homestead, killing dozens of sheep.
The owner of Dagworth Homestead and three policemen gave chase to a man named Samuel Hoffmeister - also called Samuel "French(y)" Hoffmeister. Rather than be captured, Hoffmeister shot and killed himself at the Combo Waterhole.
Bob Macpherson (the brother of Christina) and Banjo are said to have taken rides together at Dagworth. Here they may have passed the Combo Waterhole, where Bob may have told this story to Banjo.
The song itself was first performed on 6 April 1895 at the North Gregory Hotel in Winton, Queensland. The occasion was a banquet for the Premier of Queensland. It became an instant success.
In 1903 it was picked up by the Billy Tea company for use as an advertising jingle, making it nationally famous. A third variation on the song, with a slightly different chorus, was published in 1907. Paterson sold the rights to Waltzing Matilda and "some other pieces" to Angus and Robertson Publishers for "five quid" (a "quid" is Australian slang for a pound, the then unit of currency).
The song was falsely copyrighted by an American publisher in 1941 as an original composition. However, no copyright applies in Australia.
The song has been covered by a number of Australian artists over the years, notably Lazy Harry. In 1958, Bill Haley and His Comets recorded a version with new lyrics entitled "Rockin' Matilda" (Haley's version is about a beautiful Australian girl named Matilda).
The score of the 1959 film On the Beach, written by Ernest Gold is based heavily on motifs from "Waltzing Matilda". The film, about the end of the world in a nuclear holocaust, is set in Australia and director Stanley Kramer was insistent on the "Waltzing Matilda" motif. The song itself is heard in the last minutes of On the Beach.
A derivative work, And The Band Played Waltzing Matilda, was created by Eric Bogle in 1972, and performed most popularly by The Pogues on the album Rum Sodomy & the Lash. The song graphically documents the Australian experience at the Battle of Gallipoli and ANZAC Day remembrance since, from the point of view of a soldier who loses both legs in the fighting. The song incorporates the melody and a few lines of the "Waltzing Matilda's" lyrics at its conclusion.