The song was composed in response to an open invitation from Broadside magazine for songs about one of the top news events of 1962: the enrollment of a black student, James Meredith, in the University of Mississippi on October 1. Among other submissions was Phil Ochs' song "Ballad of Oxford, Mississippi". The lyrics and music from Dylan's song were printed December 1962 in Broadside's issue #17.
Except that the University of Mississippi is located in Oxford, Mississippi, "Oxford Town" does not mention either Meredith or the university by name. Later, in an interview with Studs Terkel, Dylan said, "It deals with the Meredith case, but then again it doesn't... I wrote that when it happened, and I could have written that yesterday. It's still the same. 'Why doesn't somebody investigate soon' that's a verse in the song."
Richie Havens recorded "Oxford Town" in 1966 for his second album, Electric Havens. Tim O'Brien featured the song on his 1996 release of Dylan covers, Red on Blonde. The alternative bluegrass band Crooked Still recorded the song for their 2006 album Shaken by a Low Sound. Hugues Aufray released a French version of this (and ten other Dylan songs) in 1965 on his LP Aufray chante Dylan. Pat Wictor recorded Oxford Town on his album Heaven is so High in 2006.