Tennessee bottlers Barney and Ally Hartman developed Mountain Dew as a mixer in the 1940s. Soft drinks were sold regionally in the 1930s, and the Hartmans had difficulty in Knoxville obtaining their preferred soda to mix with liquor, preferably whiskey, so the two developed their own. Originally a 19th-century slang term for whiskey, especially Highland Scotch whiskey, the Mountain Dew name was trademarked for the soft drink in 1948.

Charles Gordon, who had partnered with William Swartz to bottle and promote Dr. Enuf, was introduced to Mountain Dew when he met the Hartman brothers on a train and they offered him a sample. Gordon and the Hartman brothers subsequently made a deal to bottle Mountain Dew by the Tri-Cities Beverage Corporation in Johnson City, Tennessee.

The Hartman brothers also asked Coca-Cola for input on their soda. The Coca-Cola Company refused their offer.

The Tip Corporation of Marion, Virginia bought the rights to Mountain Dew, revising the flavor and launching it in 1961.In 1964, Pepsico purchased the Tip Corporation and thus acquired the rights to Mountain Dew.In 1999, the Virginia legislature recognized Bill Jones and the Town of Marion for their role in the history of Mountain Dew.

"Mountain Dew" was originally Southern and/or Scots/Irish slang for moonshine (i.e., homemade whiskey). Using it as the name for the soda was originally suggested by Carl E. Retzke at an Owens-Illinois Inc. meeting in Toledo, Ohio, and was first trademarked by Ally and Barney Hartman in the 1940s. Early bottles and signage carried the reference forward by showing a cartoon-stylized hillbilly. The first sketches of the original Mountain Dew bottle labels were devised in 1948 by John Brichetto, and the representation on product packaging has changed at multiple points in the history of the beverage.