The song's exact origins are unknown. A number of its lines and the general plot resemble those of a contemporary broadside ballad Patrick Fleming (also called Patrick Flemmen he was a Valiant Souldier) about an Irish highwayman executed in 1650.

In the book The Folk Songs of North America, folk music historian Alan Lomax suggests that the song originated in the 17th century, and (based on plot similarities) that John Gay's 1728 The Beggar's Opera was inspired by Gay hearing an Irish ballad-monger singing Whiskey in the Jar. In regard to the history of the song, Lomax states, "The folk of seventeenth century Britain liked and admired their local highwaymen; and in Ireland (or Scotland) where the gentlemen of the roads robbed English landlords, they were regarded as national patriots. Such feelings inspired this rollicking ballad."

At some point, the song came to the United States and was a favorite in Colonial America because of its irreverent attitude towards British officials. The American versions are sometimes set in America and deal with American characters. One such version, from Massachusetts, is about Alan McCollister, an Irish-American soldier who is sentenced to death by hanging for robbing British officials.

The song appeared in a form close to its modern version in a precursor called The Sporting Hero, or, Whiskey in the Bar in a mid-1850s broadsheet.

What’s the story ?

"Whiskey in the Jar" is the tale of a highwayman who, after robbing a military or government official ("for I am a bold deceiver"), is betrayed by a woman named Jenny or Ginny; whether she is his wife or sweetheart is not made clear. Various versions of the song take place in Kerry, Kilmagenny, Cork, Gilgarra Mountain, Sligo Town, and other locales throughout Ireland. The narrator of the song is not named. The only consistently named figures are the sweetheart who betrays the narrator, "Jenny/Ginny", and the Anglo-Irish official, "Captain Farrell", neither of which aids in the dating of the song. The song ends with the narrator dreaming of escape and fleeing the town of his imprisonment to pursue his love of 'the good life.'

The Thin Lizzy version differs from the traditional one by dropping two verses and changing the lyrics of the second and third verse into a different interpretation of the story while sticking to the main idea slightly. They also change the name of the female lover from Jenny to Molly, as in the Garcia/Grisman version.