The "Funkytown" is New York City. A songwriter and producer named Steven Greenburg wrote the song when he became bored with Minneapolis and wanted to move to New York, which he called "Funkytown."
Lipps Inc. (pronounced "Lip Synch") was formed especially for this song. The vocals were by Cynthia Johnson, who was Miss Black Minnesota 1976. The group continued to record until 1985 with a changing lineup, but they failed to see the success they'd had with their first hit.
Steven Greenburg became A&R Vice President for Mercury Records, signing Hanson, among other acts. Later he headed the S-Curve Records label, signing the Baha Men and Joss Stone.
The Australian pop group Pseudo Echo had a #1 hit in Australia and a Top 10 hit in both the US and UK with their rockier version of this song in 1986. Earlier that year, they made their debut on the US charts at #57 with "Living in a Dream." Their success in the States was short-lived, but the group did continue to impress in other corners of the world. They won the top prize of $10,000 at the 18th World Popular Song Festival (aka Yamaha Music Festival) in Tokyo for their performance of "Take on the World."
This song has been used in a number of TV series, including:
Everybody Loves Raymond (High School - 1997)
Will & Grace (Will Works Out - 1999)
Malcolm in the Middle (Rollerskates - 2000)
Futurama (Amazon Women in the Mood - 2001)
Friends (The One Where the Stripper Cries - 2004)
Parenthood (Left Field - 2012)
Gotham (Penguin's Umbrella - 2014)
It has also featured in these movies:
History of the World: Part I (1981)
North Shore (1987 - Pseudo Echo version)
Shrek 2 (2004)
The Dictator (2012)
A cover by Alvin and the Chipmunks returned this song to the Billboard Hot 100 in January 2008, reaching #86. The Chipmunks version featured in the 2007 film Alvin and the Chipmunks.