Robbie Robertson wrote this song, which is about the American Civil War - "Dixie" is a term indicating the old American South, which was defeated by the Union army. The song is not related to his heritage, as Robertson is half-Mohawk Indian, half-Jewish Canadian.
Robertson came up with the music for this song, and then got the idea for the lyrics when he thought about the saying "The South will rise again," which he heard the first time he visited the American South. This led him to research the Civil War. (thanks, Edna - Madrid, Spain, for above 2)
This was recorded in Sammy Davis Jr.'s house in Los Angeles. The Band rented it and converted a poolhouse into a studio to record their second album.
The vocals featured the 3-part harmonies of Levon Helm, Richard Manuel, and Rick Danko.
Joan Baez covered this in 1971. It was her biggest hit, reaching US #3 and UK #6.
Baez changed some of the lyrics on her version. For example, she sings, "Virgil Cain
is my name and I drove on the Danville train. 'Til so much cavalry came and tore up the tracks again." The original lyrics are, "Virgil Cain is THE name and I SERVED on the Danville train. 'Til STONEMAN'S cavalry came and tore up the tracks again" referring to George Stoneman, who was a general in the Union army). There are several other inconsistencies between her version and The Band's original, including changing the line, "There goes Robert E. Lee" to "There goes THE Robert E. Lee" (which is a boat). (thanks, Geoffrey - Fort Collins, CO)