Originally the flag of the Republic of West Florida and adopted on September 23, 1810.
In September 1810 settlers in the Spanish territory of West Florida proclaimed independence and formed a new republic. The West Florida Republic covered the areas now known as Louisiana, Mississippi, Alabama and Florida. However 74 days after declaring independence, West Florida was annexed by the United States and the West Florida Republic peacefully ceased to exist.
In 1861, at the dawn of the Civil War, Mississippi seceded from the Union and the Bonnie Blue flag was raised over the Capitol building in a sign of independence. A Scottish immigrant named Henry McCarthy was present and later wrote a song called "The Bonnie Blue Flag" - 'bonnie' being a Scottish word meaning beautiful.
One unsubstantiated story is that when Mississippi seceded from the Union they wished to "take their one star with them from the Union flag."
The flag is still used to represent the South and for some is a way of representing favor for States rights. Because the flag pre-dates the Civil War and is not associated with slavery, it is considered to be a less offensive alternative to the Confederate Battle Flag.