The song was rumoured to be about smoking dried banana skins, which was believed to be a hallucinogenic drug in the 1960s, though this aspect of bananas has since been debunked. According to Donovan's notes accompanying the album Donovan's Greatest Hits, the rumour that one could get high from smoking dried banana skins was started by Country Joe McDonald in 1966, and Donovan heard the rumour three weeks before "Mellow Yellow" was released as a single. According to The Rolling Stone Illustrated Encyclopedia of Rock and Roll, he admitted later the song made reference to a vibrator; an "electrical banana" as mentioned in the lyrics. This definition was re-affirmed in an interview with NME magazine: "it's about being cool, laid-back, and also the electrical bananas that were appearing on the scene - which were ladies' vibrators."
The phrase "mellow yellow" appears towards the end of James Joyce's novel Ulysses, where it is used to refer to Mrs. Marion Bloom's buttocks. But it is not known if Donovan took the phrase from there.
The record had a "Beatlesque" feel to it, and was sometimes mistaken for a Beatles song. Donovan, in fact, was friends with the Beatles. Paul McCartney can be heard as one of the background revellers on this track, but contrary to popular belief, it is not McCartney whispering the "quite rightly" answering lines in the chorus, but rather Donovan himself. Donovan had a small part in coming up with the lyrics for "Yellow Submarine", and McCartney played bass guitar (uncredited) on portions of Donovan's Mellow Yellow album.
Laing, Dave (1975). The Electric Muse: the story of Folk into Rock. Methuen. p. 151. ISBN0-413-31860-5. "Donovan (...) did change styles to make a couple of enormously successful pop singles, "Mellow Yellow" and "Sunshine Superman", before disappearing from the front ranks."
Buckley, Peter (2003). The Rough Guide to Rock. Rough Guides. p. 305. ISBN978-1-8435-3105-0. "A further move into psychedelic pop spawned another million-seller in “Mellow Yellow” — [Donovan's] best-known song"
Ellis, Iain (2012). Brit Wits: A History of British Rock Humor. Intellect Books. p. 42. ISBN978-1-8415-0565-7. "Hits like “Mellow Yellow” (1967) and “Hurdy Gurdy Man” (1968) saw Donovan become the public face of fanciful British psychedelic pop in the latter part of the decade."
^The phrase appears twice in Episode 17 ("Ithaca") of Part III: "He kissed the plump mellow yellow smellow melons of her rump , on each plump melonous hemisphere, in their mellow yellow furrow, with obscure prolonged provocative mellonsmellonous osculation". Joyce, J. (1960), Ulysses, Harmondsworth: Penguin Modern Classics, ISBN 0-14-00-3000-X, p.656