Apparently, it was introduced during American Colonial times along with some other interesting beverages including Birch Beer. The root beer managed to stick around for a while, there are even historical documents which show 18th century farmers brewing an alcoholic version of root beer for family get-togethers and other events.
In 1870, an unknown pharmacist came up with a recipe for root beer using juniper, wintergreen, spikenard, pipsissewa, sarsaparilla, vanilla beans, hops, dog grass, birch bark and licorice. Even though the pharmacist offered the drink to the public as a cure-all, it was never marketed or well-received for that matter.
Around the same time, Charles Hires, another pharmacist, was on his honeymoon when he discovered an herbal tea he was apparently fond of. He took the recipe home to Philadelphia with him and he started selling mixes for it to the public. He later developed a liquid concentrate blended together from over 25 herbs, berries and roots. The public loved it, and thus commercial root beer was introduced to the public in 1876 at the Philadelphia Centennial Exhibition. By 1893, the Hires family sold bottled root beer, sealing their place in the drink’s history.
The key ingredient to root beer is sassafras root. In 1960, the U.S. Food and Drug Administration banned the use of sassafras oil, labeling it a carcinogen. Not long after the ban, inventors discovered that sassafras could be used if treated to remove the oil. The industry was saved.
Today, root beer is made from a mixture of flavorings, sweeteners, carbonation and a large number of herbs and oils depending on the brew, bottler and manufacturer.
My Source: http://www.essortment.com/all/historyrootbeer_rhnc.htm
Update: My original source of information left the face of the internet. :( Luckily this wikipedia article on root beer is alive and well and very informative.
