"Fairytale of New York" takes the form of a drunken Irish immigrant man's Christmas Eve reverie about holidays past while sleeping off a binge in a New York City drunk tank. After an inebriated old man also incarcerated in the jail cell sings a passage from the Irish drinking ballad "The Rare Old Mountain Dew," the drunken man begins to dream about the song's female character. The remainder of the song (which may be an internal monologue) takes the form of a call and response between the couple, their youthful hopes crushed by alcoholism and drug addiction, reminiscing and bickering on Christmas Eve in New York City.
Released in 1987 and featuring the British singer Kirsty MacColl, the song is an Irish folk style ballad, written by Jem Finer and Shane MacGowan, and featured on The Pogues' album If I Should Fall from Grace with God. It is frequently cited as the best Christmas song of all time in various television, radio and magazine related polls in Ireland and the UK.
The song was originally planned as a duet by Shane MacGowan and Pogues bassist Cait O'Riordan, but O'Riordan left the band in 1986, before the song was completed. The Pogues were at the time being produced by Kirsty MacColl's then husband Steve Lillywhite, who asked his wife to provide a guide vocal of the female part for a demo version of the song. The Pogues liked MacColl's contribution so much that they asked her to sing the part on the actual recording.