Southern blacks used "peckerwood" as a derogatory term to describe poor and/or rural Southern whites. A dictionary of African-American slang explains that the term "peckerwood" had its origins in the word "woodpecker." Blacks saw blackbirds as a symbol of themselves and the contrasting redheaded woodpecker as a representation of whites. Eventually, the word "woodpecker" was inverted to become "peckerwood" in an attempt to hide the meaning and origin of the term. Later, peckerwood came to be used in the North as well, as a general description for white people.

At some point, peckerwood evolved into a term used to describe white prison inmates. In prison slang, a peckerwood or "wood" was a white inmate who was willing to fight to avoid being raped or robbed. Over time, white inmates appropriated the term peckerwood and made it a source of pride.

Currently, the term peckerwood is used to refer both to white youths with loose ties to white power gangs in and out of prison, as well as to actual skinhead gangs who have incorporated "peckerwood" into their name. The various Peckerwood gangs appear to be concentrated largely in California, where they participate in the methamphetamine trade and have ties to other white supremacist gangs such as the Nazi Low Riders. Peckerwood gang members have been charged with a variety of crimes ranging from dealing drugs to attempted murder. Many gang members sport Peckerwood tattoos to display their affiliations.