A special role in the spread of the Old Fashioned is often attributed to the Pendennis Club in Louisville (Kentucky). According to an often-circulated legend, bartender Martin Cuneo served the first Old Fashioned there to a general named James E. Pepper in the first half of the 1890s. However, the story did not appear until many decades later, including in Albert Stevens Crocket's book Old Waldorf Bar Days, and is considered dubious.
In the 20th century, the drink, now mostly referred to as Old Fashioned Cocktail or Old Fashioned for short, became a bar classic. Sometimes it was served by having the bartender simply add the Bitters-sugar mixture and passed it along with a bottle of bourbon whiskey.
The cocktail was particularly popular during the Prohibition era, as many of the moonshine whiskeys were barely palatable without the addition of sugar and other ingredients. The high-proof bitters were still legally available during this time, as their strong flavor made them unsuitable for consumption on their own. Old Fashioneds have been mentioned in almost all important recipe collections since the beginning of the 20th century, for example in Harry Craddock's influential Savoy Cocktail Book from 1930. The recipe contained therein also makes it clear that it had meanwhile become customary to serve the cocktail directly in the guest glass, usually a tumbler thick-bottomed, to "build" rather than shake and strain: first soaking a lump of sugar in angostura and crushing it with a pestle, before adding whiskey (preferably rye whiskey, alternatively brandy, gin, rum) and ice, and finally garnished the drink with lemon zest and an orange slice.
In other recipes from the 1930s, the orange slice - or just a piece of peel - was added to the drink and crushed with the sugar, sometimes other fruits such as cocktail cherries or pieces of pineapple were added or the drink was lengthened with soda water, sometimes liqueur was added , for example add a dash of Curaçao.
Similar to the Martini, the Old Fashioned was also subject to constant change and was served in the 20th century both as a strongly alcoholic "old man's drink", which allowed no other ingredients apart from whiskey, little sugar and a few Dashes Bitters, as well as in fruity variants that eclipsed the taste of spirits and created a more "punchy" (punch-like) drink that was served in many American families as a traditional Thanksgiving or Christmas appetizer.
Especially in the phase of the 1970s and 1980s, which in retrospect is sometimes referred to as the "dark age" of cocktail culture, the versions with crushed fruit and other ingredients were the norm. In the course of the return to classic recipes, many bartenders now frown on them because they see them as deviating too much from the original, while others call it a "fruit salad old-fashioned" can definitely get something out of it.