The name Athole (or Atholl) derives from the Gaelic ath Fodla, generally translated as New Ireland, and stems from the first invasion of the northern land by the Irish tribe the Scots in the 7th century.
The tune, described sometimes as a Scottish warpipes melody, is dedicated to the private army of the Duke of Atholl, the last private army still legally existing (albeit on a token level) in the British Isles (Boys of the Lough).
The original Athole Highlanders were the old 77th Highland Regiment, raised in 1778 and commanded by Colonel James Murray. The 77th served in Ireland and was not engaged in active service, though its garrison services were apparently useful in freeing other units for the conflicts with America and France. They were disbanded in 1783 after those conflicts ended (although the disbanding may have come about because of a mutiny). The tune was later taken up as a march past by the 2nd Battalion of the Cameronians, the 90th Light Infantry, who over the years had shed their Scottish origins. However, when pipers were introduced in 1881 they recollected their Perthshire origins and chose to play "The Atholl Highlanders" (also known in pipe literature as Gathering of the Grahams.
The tune is associated in modern times with the dance called The Duke of Gordon's Reel, so much so that Scottish dance musicians will sometimes call "Atholl Highlanders" by the name "Duke of Gordon's Reel" (despite the fact that "Atholl Highlanders" is a jig but referring to 6/8 time tunes as 'reels' is an old convention.