While mostly known as a British holiday custom, the appointment of a Lord of Misrule comes from antiquity. In ancient Rome, from the 17th to the 23rd of December, a Lord of Misrule was appointed for the feast of Saturnalia, in the guise of the good god Saturn. During this time the ordinary rules of life were turned topsy-turvy as masters served their serfs, and the offices of state were held by slaves. The Lord of Misrule presided over all of this, and had the power to command anyone to do anything during the holiday period. This holiday seems to be the precursor to the more modern holiday.
However, according to the anthropologist James Frazer, there was a darker side to the Saturnalia festival. In Durostorum, Roman soldiers would choose a man from among them to be the Lord of Misrule for thirty days. At the end of that thirty days, his throat was cut on the altar of Saturn. Similar origins of the British Lord of Misrule, as a sacrificial king (a temporary king, as Frazer puts it) who was later put to death for the benefit of all, have also been recorded.
References to this ancient sacrifice have been spotted in the 1973 film The Wicker Man.
While the mediaeval and later Roman custom of a Lord of Misrule as a master of revels, a figure of fun and no more than that is most familar, there does seem to be some indication of an earlier and more unpleasant aspect to this figure. Frazer recounts:
"We are justified in assuming that in an earlier and more barbarous age it was the universal practice in ancient Italy, wherever the worship of Saturn prevailed, to choose a man who played the part and enjoyed all the traditionary privileges of Saturn for a season, and then died, whether by his own or another?s hand, whether by the knife or the fire or on the gallows-tree, in the character of the good god who gave his life for the world."
http://www.bartleby.com/196/145.html - The portion of James Frazer's Golden Bough which deals with the Lord of Misrule.External Link