One on the side of practicality holds that in about 1670, the choirmaster at Cologne Cathedral grew frustrated by fidgety kids in his church's living Nativity. He had some white, sugar-candy sticks made to keep the youngsters quiet. The sticks were curved like shepherds' staffs in honour of the shepherds at the stable. The idea caught on, and candy sticks became common at living Nativities all over Europe.
In 1847, a German-Swedish immigrant named August Imgard put candy canes on his Christmas tree in Wooster, Ohio. The sweets gained popularity here, too, and around the turn of the century, they assumed their now familiar properties of red stripes and peppermint flavoring. Though these elements might have been added for symbolic purposes, there's scant solid evidence to confirm that theory.
(Read the whole story here.)