The Orange Order commemorates William of Orange, the Dutch prince who became King of Great Britain and Ireland in the Glorious Revolution of 1688. In particular, the Order remembers the victories of William and his forces in Ireland in the early 1690s, especially the Battle of the Boyne.

The history of Order is tied in with the conflict of the late 1700s. It aimed to confront both the Catholic Defenders and the United Irishmen (generally Presbyterians) by consolidating the Protestant Churches against the Catholic church.

The Orange Order was founded in Loughgall in County Armagh in 1795 after the Battle of the Diamond between the Catholic Defenders and the Protestant Peep O'Day Boys. The three main founders were James Wilson, Daniel Winter and James Sloan.

The 1790s were a time of agitation in Ireland, much of it led by the Society of United Irishmen, founded in October 1791 by Belfast democrats. They wanted a strong Irish Government and called for parliamentary reform with equal representation for all Irish males regardless of religion. Shortly after the Order's establishment, the Governor of Armagh, Lord Gosford, gave his opinion of the new group to a meeting of magistrates: "It is no secret that a persecution is now raging in this country… the only crime is… profession of the Roman Catholic faith. Lawless banditti have constituted themselves judges…" However, against the background of the seditious activity the government backed the Orange Order from 1796. Thomas Knox, British military commander in Ulster, wrote in August 1796, "As for the Orangemen, we have rather a difficult card to play...we must to a certain degree uphold them, for with all their licentiousness, on them we must rely for the preservation of our lives and properties should critical times occur."

Many Orangemen fought on the government side in the subsequent Irish Rebellion of 1798. Such a reaction was fueled by some rebel atrocities against Protestants, such as the Scullabogue Barn massacre.

The above paragraphs are from "The Orange Institution" from wikipedia. It is a long article with a lot of information. I DO so like it when they throw primary source quotes in there...