The lyrics for "Puff, the Magic Dragon" were based on a 1959 poem by Leonard Lipton, a nineteen-year-old Cornell student. Lipton was inspired by an Ogden Nash poem titled "Custard the Dragon," about a "Really-O, Truly-O, little pet dragon." Lipton passed his poem on to friend and fellow Cornell student Peter Yarrow, who created music and more lyrics to make the poem into the song. In 1961, Yarrow joined Paul Stookey and Mary Travers to form Peter, Paul and Mary. The group incorporated the song into their live performances before recording it in 1962; their 1962 recording of "Puff" reached #2 on the Billboard Hot 100 chart in early 1963. This song also spent two weeks atop the Billboard easy listening chart that same year.
The lyrics tell a story of the ageless dragon Puff and his playmate Jackie Draper, a little boy who grows up and loses interest in the imaginary adventures of childhood and leaves Puff alone and depressed. The story of the song takes place "by the sea" in the fictional land of Honalee (Sometimes spelled Honah Lee).
A 2007 book adaptation of the song's lyrics by Yarrow, Lipton and illustrator Eric Puybaret gives the story a happier ending with a young girl (presumed by reviewers to be Jackie Paper's daughter ) seeking out Puff to become his new companion.
The song is believed by many to refer to smoking marijuana, due to references to paper, dragon ("draggin'"), puff (smoke), traveling "along the cherry lane" (the burning ember of a cigarette or joint is called a cherry, and moves up the cigarette's length as it burns), and Hanalei (Honahlee) is a town in Hawaii known for marijuana use. This theory led to the song becoming a hippie anthem. The authors of the song have repeatedly and vehemently denied any intentional drug reference. Peter Yarrow himself insists that "Puff" is about the hardships of growing older, not drugs. He has also said of the song that it "never had any meaning other than the obvious one".
Also, during a live performance, Yarrow once mocked the drug related interpretations by reciting his own drug related reinterpretation of the Star-Spangled Banner, and ended by saying, "...You can wreck anything with that kind of idiotic analysis.
"Paul" of Peter, Paul and Mary also upheld the song's innocence. Noel "Paul" Stookey recorded a version of the song at the Sydney Opera House in March of 1976, in which he set up a fictitious trial scene. The Prosecutor, a snake, accused the song of being about marijuana, but Puff and Jackie protested. The judge finally leaves the case to the jury (the Opera House audience) and says if they will sing along with the song, it will be acquitted. The audience joins in with Stookey, and at the end of their sing-along, the judge declares "case dismissed."