The song “Dixie Land” was written by Daniel Decatur Emmett and performed at Bryant’s Minstrels at 472 Broadway, New York City, on April 4, 1859. Emmett had included the name “Dixie” in his song “Jonny Roach” a little earlier that year. “Dixie” came to mean the South, and the song was played often by the Confederacy in the Civil War (1861-1865).
 
The origin of “Dixie” is disputed, but new evidence (first found in 2007) appears to provide an answer. The Mason-Dixon line divided north and south in the 1760s. In the early 1800s, New York City children played a game of “tag” on city streets. The game was called “dixie” and involved a line of demarcation. This street game is described in the 1844, 1861, and 1872 citations below.
 
The other theories for the origin of “dixie” are not accepted by lexicogaphers. Banks in Louisiana did issue “dix” (French for “ten”) dollar notes, but these notes were not widely used or even called “dixies.” The Lousiana notes were not used in New York City, where the word “dixie” is first recorded. A published explanation in 1861 stated that there was an old slaveholder in Manhattan named Dixie or Dixey or Dixy, but there do not appear to be records of such a person in the New York directories.
 
 
Wikipedia: Dixie
Dixie is a nickname for the Southern region of the United States.
Origin of Dixie
According to the Oxford English Dictionary, the origins of this nickname remain obscure. According to A Dictionary of Americanisms on Historical Principles (1951), by Mitford M. Mathews, three theories most commonly attempt to explain the term:

1. The word “Dixie” refers to a privately issued currency from banks in Louisiana. These banks issued ten-dollar notes, labeled “Dix” (French for “ten”) on the reverse side. These notes are now highly sought-after for their numismatic value. The notes were known as “Dixies” by English-speaking southerners, and the area around New Orleans and the Cajun-speaking parts of Louisiana came to be known as “Dixieland”. Eventually, usage of the term broadened to refer to most of the Southern States.
2. The word preserves the name of a kind slave owner on Manhattan Island, a Mr. Dixy. (Slavery was legal in New York until 1827.) His rule was so kindly that “Dixy’s Land” became famed far and wide as an elysium abounding in material comforts.
3. “Dixie” derives from Jeremiah Dixon of the Mason-Dixon line defining the boundary between Maryland and Pennsylvania (the northern boundary of Dixie).
The Mason-Dixon theory is the most popularly known, but few lexicographers give it much weight.
(...)
“Dixie’s Land”
An Ohio minstrel show composer, Daniel Decatur Emmett, wrote the song called “Dixie’s Land”, first published by Phillip Werlein in New Orleans in 1859. The tune popularly became known simply as “Dixie”. Many people identify the lyrics of the song with the iconography and ideology of the Old South. Some have considered it an unofficial “national anthem” of the South. It is often regarded as the southern counterpart to “The Battle Hymn of the Republic”.
   
The chorus and first verse are still well known in much of the U.S. South. The additional verses are very seldom heard.
 
Lyrics:
 
I wish I was in the land of cotton,
Old times there are not forgotten;
Look away! Look away! Look away, Dixie’s Land!
In Dixie’s Land where I was born in,
Early on one frosty morning,
Look away! Look away! Look away, Dixie’s Land!
 
Then I wish I was in Dixie! Hooray! Hooray!
In Dixie’s Land I’ll take my stand, to live and die in Dixie!
Away! Away! Away down South in Dixie!
Away! Away! Away down South in Dixie!
 
Old Missus married “Will the Weaver”;
William was a gay deceiver!
Look away! Look away! Look away, Dixie’s Land!
But when he put his arm around her,
Smiled as fierce as a forty-pounder!
Look away! Look away! Look away, Dixie’s Land!
 
Then I wish I was in Dixie! Hooray! Hooray!
In Dixie’s Land I’ll take my stand, to live and die in Dixie!
Away! Away! Away down South in Dixie!
Away! Away! Away down South in Dixie!
 
His face was sharp as a butcher’s cleaver;
But that did not seem to grieve her!
Look away! Look away! Look away, Dixie’s Land!
Old Missus acted the foolish part
And died for a man that broke her heart!
Look away! Look away! Look away, Dixie’s Land!
 
Then I wish I was in Dixie! Hooray! Hooray!
In Dixie’s Land I’ll take my stand, to live and die in Dixie!
Away! Away! Away down South in Dixie!
Away! Away! Away down South in Dixie!
 
Now here’s a health to the next old missus
And all the gals that want to kiss us!
Look away! Look away! Look away, Dixie’s Land!
But if you want to drive away sorrow,
Come and hear this song tomorrow!
Look away! Look away! Look away, Dixie’s Land!
 
Then I wish I was in Dixie! Hooray! Hooray!
In Dixie’s Land I’ll take my stand, to live and die in Dixie!
Away! Away! Away down South in Dixie!
Away! Away! Away down South in Dixie!
 
There’s buckwheat cakes and Injin batter,
Makes you fat or a little fatter!
Look away! Look away! Look away, Dixie’s Land!
Then hoe it down and scratch your gravel,
To Dixie’s Land I’m bound to travel!
Look away! Look away! Look away, Dixie’s Land!

Then I wish I was in Dixie! Hooray! Hooray!
In Dixie’s Land I’ll take my stand, to live and die in Dixie!
Away! Away! Away down South in Dixie!
Away! Away! Away down South in Dixie!
       
Wikipedia: Dan Emmett
Daniel Decatur “Dan” Emmett (October 29, 1815 – June 28, 1904), was an American songwriter and entertainer.
(...)
Dan Emmett is traditionally credited with writing the famous song “Dixie”. The story that he related about its composition varied each time he told it, but the main points were that he composed the song in New York City while a member of Bryant’s Minstrels. The song was first performed by Emmett and the Bryants at Mechanics’ Hall in New York City on April 4, 1859. The song became a runaway hit, especially in the South, and the piece for which Emmett was most well known. Emmett himself reportedly told a fellow minstrel that “If I had known to what use they [Southerners] were going to put my song, I will be damned if I’d have written it.” 
 
Wikipedia: Mason-Dixon line
The Mason–Dixon Line (or “Mason and Dixon’s Line”) is a demarcation line between four U.S. states, forming part of the borders of Pennsylvania, Maryland, Delaware, and West Virginia (then part of Virginia). It was surveyed between 1763 and 1767 by Charles Mason and Jeremiah Dixon in the resolution of a border dispute between British colonies in Colonial America. Popular speech, especially since the Missouri compromise of 1820 (apparently the first official usage of the term “Mason’s and Dixon’s Line”), uses the Mason-Dixon line symbolically as a cultural boundary between the Northern United States and the Southern United States (Dixie).
 
(Historical Dictionary of American Slang)
Dixie n.
[orig. unkn. ; associated with the song “Dixie’s Land” (popularly “Dixie”) written by the Ohian Daniel D. Emmett (1815-1904), a celebrated blackface minstrel, and first performed April 4, 1859, in New York City; the form Dixie Land had appeared without explanation or elaboraiton in Emmett’s song “Jonny Roach,” performed in February of the same year. Of various proposed etymologies, that sugg. by Hotze in the 1861 quot. below is perh. to be favored on phonological as well as historical grounds. The assertion (1872 N.Y. Weekly quot. below) that the phrase Dixie’s Land had been part of a N.Y.C. children’s game for many decades cannot be substantiated and even if true would not explain the phrase’s origin. See H. Nathan, Dan Emmett, pp. 243-75 for a full discussion. (The existence of a minstrel showman named Dixey (1951 quot. below) and a blackface character called Dixie in a skit of 1850 (Nathan, p. 265) is inriguing, but neither can be shown to have influenced the development of the present word; see also 1872 Emmett, below).]
 
the southern states of the United States, esp. those that were part of the Confederacy. Now colloq. or S.E. [The word was colloq. or S.E. soon after the Civil War but was slang in earliest use.]
1859 (Feb.) D. Emmett “Jonny Roach” (minstrel song), in H. Nathan Dan Emmett 358: Gib me de place called Dixie Land,/Wid hoe and shubble in my hand.
1859 (Apr.) D. Emmett, in 249:

...In Dixie Land whar I was born in….Den I wish I was in Dixie…To lib and die in Dixie…away down south in Dixie.
1861 H. Hotze, in Harwell Confed. Reader 27: This tune of “Dixie”...we shall be fortunate if it does not impose its very name on our country. Ibid. 29: The word “dixie” is an abbreviation of “Mason and Dixon’s line.”...Years before I heard the tune I have heard negroes in the North use the word “Dixie” in that sense, as familiarly as we do the more lengthy phrase from which it is derived.
1872 D. Emmett, in Nathan D. Emmett 287: “Dixie’s Land” is an old phrase applied to the Southern States…lying south of Mason and Dixon’s line. In my traveling days amongst showmen [before 1859], when we would start for a winter’s season south, while speaking of the change, they would invariably ejactulate [sic] the steroetyped saying:—“I Wish I was in DIxie’s Land,” meaning the southern country.
1872 N. Y. Weekly (Dec. 30) 6: Its origin has been described as Southern, but such is not the case. During any time within the last eighty years the term “Dixie’s Land” has been in use with the New York boys while engaged in the game of “tag.”
   
Google Books
Old Fulton NY Post Cards
20 July 1844, The New World: A Weekly Family Journal of Popular Literature, Science, Art and News (New York, NY), “A Summer Talk” by Lincoln Ramble, Esq., pg. 65, col. 2:
The open doors and windows exhibit old gentlemen with very light clothing sleepily winking in the evening breeze; the boisterous children scream and throng about the pumps, or play at “Dixey’s Land” on the newly washed pavement; the bakers tumble out of their dens to catch a mouthful of air, and the watchmen loiter along their posts as if their duty consisted in demonstrating the pleasure of sloth.
 
Google Books
Old Fulton NY Post Cards
28 December 1844, The New World: A Weekly Family Journal of Popular Literature, Science, Art and News (New York, NY), “Sequel to ‘The Christmas Carol’” by Lincoln Ramble, Esq., pp. 803-04:
Phew! away go puddings, goose, and dessert, and here we are, in the midst of a joyous group twisting themselves into all the whirling and snake-like movements of a rollicking dance. Does n’t Old Fezziwig figure here like some planet that, bent upon a spree, joslled [sic] against all other planets in his system, crossing and recrossing their orbits, playing, “Dixey’s Land,” in the region of space.
   
22 January 1852, New-York (NY) Observer, pg. 29, col. 4:
TO A L—S—SEWING WIDOW.
(...)
And when the day for toil is o’er,
The evening sports commence—
“I Spy” and “Tag” and “Dicky’s Land,”
Out by the garden fence.
 
Google Books
1855, The Opal (Asylum, Utica, NY), Vol. 5, No. 2, pg. 45:
PARLOR SCENE, No. 3
(...)
Miss C. — ” Those who go to Dixey’s land must be Dixey’s men.”
Miss J. — ” But when Dixey comes to our land, Dixey’s not at home. Ah! Home — here woman reigns as mother, daughter, wife, and to her kings submit.
     
Newspapers.com
25 December 1856, Buffalo (NY) Morning Express and Daily Democracy, “The Checkerbee Ghost,” pg. 2, col. 5: 
[A] group of merry, shouting, red cheeked boys, who went on one knee to strap their skates, stamped the “heel cork” into their boots; played “Dickie’s land” and “Tag;” cut curly Q’s on the ice (...)—all just as he had done, well nigh half a century before.
 
Chronicling America
19 May 1859, New York (NY) Herald, pg. 4, col. 1:
BRYANTS’ MINSTRELS, MECHANICS’ HALL, 427 Broadway. NEGRO SONGS, &c.—DIXIES’ LAND.
 
Chronicling America
11 September 1859, New York (NY) Herald, pg. 7, col. 3 ad:
BRYANT’S MINSTRELS
MECHANICS’ HALL, No. 472 Broadway.
Above Grand street.
(...)
DIXEIS LAND.
   
30 July 1861, San Francisco (CA) Daily Evening Bulletin, “The Old Game of ‘Dixie’s Land,’” pg. 2:
EDITOR BULLETIN: That the philosopher and antiquarian, who seeks to discover the origin of “Dixie’s Land,”  may be placed upon the track of discovery, the writer submits a few remarks upon a sport of his early childhood—often indulged in—many decades past, in the city of New York. (...)
 
On some sidewalk having a handsome stoop—such, for illustration, as Lady Barken in Clinton street, near Col. Rutgers’; or in Bond street, at Sam Ward’s; or Dr. Francis’s, or Philip Lione’s—a boy and girl would establish themselves as Dixie and Dixie’s wife. Imaginary lines would form the boundaries on the North and South, and the opposite party would attempt crossing the sacred domain, shouting as they entered upon it, “I am on Dixie’s land, and Dixie isn’t home.” Soon, to their surprise, Dixie and his wife would rush to capture them, and as their position was in the centre they would soon succeed. As each one was caught he aided Dixie, and soon the whole opposing force was brought within the fold to share whatever had been united by them as the reward of entering Dixie’s Land.
—[Signed] OLD MAN.”
 
A game similar to the one described above has been played by the boys, from time immemorial, in Scotland. The usual cry there used, however, is “I am on Teddy’s ground—Teddy cannot catch me.”