The Random House Dictionary of American Slang dates 'Happy hour,' as a term for afternoon drinks in a bar, to a Saturday Evening Post article on military life in 1959. Cocktail lounges continued the trend of drinking before dinner. When the 18th Amendment and the Volstead Act were passed banning alcohol consumption, people would host 'cocktail hours', also known as 'happy hours', at a speakeasy before eating at restaurants where alcohol could not be served. The idea of drinking before dinner has its roots in the Prohibition era.

By the end of World War I, the practice of holding 'Happy Hours' had spread throughout the entire Navy. By June 1913, the crew of Arkansas had started referring to their regularly scheduled smokers as 'Happy Hours.' The 'Happy Hours' included a variety of entertainment, including boxing and wrestling matches, music, dancing, and movies. The name 'Happy Hour Club,' 'Happy Hour Social Club,' and similar variants, had been in use as the names of social clubs, primarily by women's social clubs, since at least the early 1880s. In early 1913, a group of 'home makers' called the 'Happy Hour Social' organised 'semi-weekly smokers' on board USS Arkansas. One possible origin of the term 'Happy Hour,' in the sense of a scheduled period of entertainment, is from the United States Navy. In act I, scene 2 of William Shakespeare's King Henry V, he says, ' Therefore, my lords, omit no happy hour/That may give furtherance to our expedition.' The use of the phrase 'happy hour' to refer to a scheduled period of entertainment is, however, more recent.

The words 'happy' and 'hour' have appeared together for centuries when describing pleasant times.

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