This stone is one of at least 6 large standing stones on the plains of Kildare, believed to have been erected in the Early Bronze Age c. 2000 BCE. They functioned as prehistoric burial markers, commemorative monuments, indicators of routeways or territorial boundaries. They are mentioned in Gerald of Wales' 1188 Topographia Hibernica: "In ancient times there was in Ireland a remarkable pile of stones, called the Giants' Dance, because the giants brought it from the furthest parts of Africa into Ireland and set it up, partly by main strength, partly by artificial contrivances, in an extraordinary way, on the plains of Kildare, near Naas".

Both this stone and its sister the Craddockstown stone, just a few hundred metres to the west, have roots in Irish mythology. It is said that they landed at their current locations as the result of a stone-throwing competition between Fionn MacCumhall and a giant. According to the tale, Fionn threw the Punchestown stone from his home on the Hill of Allen, just beating the giants throw, which landed at Craddockstown. In some versions of the story, the giant died of shame at having been beaten.