There are three different theories about the origins of Awa Odori. One is that it is a version of the Bon Odori, a dance performed in summer throughout Japan. Another is that it began from a celebration of the completion of Tokushima Castle when Hachisuka lemasa provided sake for the townspeople who got drunk and began to dance with abandon. Awa Odori features organized teams of dancers, which is suggested to have been influenced by “Furyu” – a performance art from the Heian Era that later became Noh Theatre.

The third theory is from the Miyoshi district records. In 1663 there was a yu dance at Shozui Castle, which is considered to be the origin of Awa Odori. In the 1920s, the dance festival became organized to attract tourism and was named “Awa Odori”. Every August 12 – 15, the streets of Tokushima teem with high-spirited folks enjoying a festival atmosphere.

source of a quote
http://www.pref.tokushima.jp/english/attraction/culture/