The Dandie Dinmont owes its distinctive name to a literary source and was so named by Sir Walter Scott in his novel Guy Mannering published in 1814. However the actual origins of the breed are much older than that and spring from the many indigenous terrier breeds that inhabited the Scottish and English border lands in the late 18th century.

There is evidence that the border gypsies and travelling tinkers first used these dogs for poaching, fieldwork, hunting otters, badgers and all manners of vermin even foxes. Their game and intelligence became legendary. These dogs were rough coated, black, wheaten, red and colours between and were generally known as "Salt and pepper terriers".

A prominent breeder at the turn of the 18th century who owned many of these little dogs was James Davidson of Hyndlee. It could well have been he, who with principles peculiar to himself, retained only the shorter legged and longer backed specimens which shaped the breed more as we know it today.

When the novel Guy Mannering was published in 1814 it contained several descriptions of these wee dogs and of their owners, the poaches, tinkers, crofters, and other Border characters who kept these game dogs. One such character Scott created in his novel he called Dandie Dinmont and it was thought by many that the character was based on the actual personage of James Davidson so uncanny was the resemblance.

Thereafter James Davidson was dubbed Dandie Dinmont and henceforth his dogs, which he bred prodigiously, became Dandie Dinmont terriers.
James Davidson alias Dandie Dinmont died in 1820 and he is generally considered to be the father of the breed. The English Dandie Dinmont Terrier Club was formed in 1875.