After the enormous commercial success of their 1978 hit "Y.M.C.A." which unexpectedly became the unofficial hymn and powerful advertising tool for the YMCA, the group took on another national institution, the United States Navy. The Navy contacted group manager Henri Belolo to use the song in a recruiting advertising campaign for television and radio. Belolo gave the rights for free on the condition that the Navy help them shoot the music video. Less than a month later, Village People arrived at Naval Base San Diego where the Navy provided them with the frigate USS Reasoner, several aircraft, and the crew of the ship (with the stipulation that they couldn't dance). The Navy later canceled the campaign after protests erupted over using taxpayer money for a music video of a controversial group.
In a landmark ruling in 2012, the United States District Court for the Southern District of California ruled that under the Copyright Act of 1976, Victor Willis (Village People's "Cop"/"Naval officer" and co-composer) can terminate his copyrights to songs written by him and granted to the publishers Can't Stop Productions and Scorpio Music." Willis now owns (recaptured) 33% of his songs.
The Spanish group Parchís covered this song in 1979, and it became one of their most popular songs. The cover was titled En la armada, sung in Spanish, and covered again by other groups with the same lyrics of Parchís. It is possibly the first cover of the song, and definitely the first in Spanish.
The song is performed during a sketch on The Muppet Show's fifth season, in which Viking Pigs raid an unnamed village whilst singing the song.
Japanese female pop duo Pink Lady had a top 10 hit in Japan in 1979 with a cover of "In the Navy" titled "Pink Typhoon" (see the Japanese Wikipedia article), which substituted the words "Pink lady" ("Pin-ku re-di") for "In the navy" in the song's chorus and "I want you, you want Mie/I want you, you want Kei" (referring to group members Mie Nemoto and Kei Masuda) for "They want you as a new recruit."
The Israeli pop-rock band "Tislam" has a very famous line in one of their greatest hits, "Tnu Li Rockn'Roll" (Give me Rock 'n' Roll), that says "Hoshavt oti Ba'cheder etmol ad meuchar, lishmo'a Indeonezi shel Anshei Hakfar" (You sat me down in the room yesterday evening, to hear "Indinezi" by The Village People). This line was written after the songwriter, Yair Nitzani, was a DJ at a club where people kept asking him to put on the song "Indonezi" (meaning "Indonesian") because they misheard the real name of the song. This is an example of a mondegreen, the mishearing of a phrase such that it acquires a new meaning.
The Japanese singer Teppei Shibuya also covers the song on his CD "On-Demand", this version being a full translation of the original song, except for the chorus.
Old Navy had a radio spot containing the lyric "We want you in a new swimsuit," sung to the tune of the song.
Scottish metal band Alestorm released a cover of this song on a limited 7" single.