A merkin (first use, according to the OED, 1617) is reported to be a pubic wig, worn by prostitutes after shaving their genitalia to eliminate lice or to disguise the marks of syphilis. A similar claim (not made in OED) is that merkins were worn for nude stage appearances. There are many different ways of wearing a "Merkin" mainly on the vulva or the scrotum.
The narrator of Vladimir Nabokov's Lolita (1955) recalls "Although I told myself I was looking merely for a soothing presence, a glorified pot-au-feu, an animated merkin, what really attracted me to Valeria was the imitation she gave of a little girl." This, the first appearance of the word by an established author, demonstrates that "merkin" is not merely an undergraduate prank of the 1950s *. Pynchon, in Gravity's Rainbow, says, "He wears a false cunt and merkin of sable both handcrafted...by the notorious Mme. Ophir" while the character of President Merkin Muffley in Stanley Kubrick's black comedy How I Learned to Stop Worrying and Love the Bomb is satirically named after this object.
The Shorter Oxford English Dictionary does not have a listing, but Houghton Mifflin's American Heritage Dictionary of the English Language, 4th edition does, and gives as etymology "alteration of obsolete malkin, lower-class woman, mop, from Middle English; from Malkin, diminutive of the personal name Matilda."* The Hutchinson Encyclopaedia 2000 has a brief listing:" pubic wig."
A "short and curly history of the merkin" in The Guardian June 26, 2003 purported to give some merkin history, when "comedy terrorist" Aaron Barschak, in a pink ballgown at the gates of Windsor, raised it to flash a merkin for onlookers. *
"Merkin" is also used to refer to a male sex-toy in the humorous novels of Tom Sharpe.
"Merkin" has also been used as a slang term for an American since the 1960s. (Although it is usually pronounced as "murrakin.") Originally used for its risqué meaning, the OED reports that it has become common internet slang for Americans or American English (it is regularly used, for example, on the newsgroup alt.fan.pratchett, and has spread from there to some other Discworld fan groups). "Murrikan" has been spelled many ways, many of which are homonyms and only coincidentally sound like merkin, for example "murcan" or "murkan". "Merrikan" is the English-descended language featured in Katherine Kerr's science fiction novels.
In gay slang, a merkin means the "official" male companion of a closeted female homosexual used to help allay suspicion that she is a lesbian, the male equivalent of a beard.
Pearl Jam and Neil Young released a two-song companion to Mirror Ball called Merkin Ball.
Australian talk show host Rove McManus has apperead on his show Rove Live with a fake shirt from the basketball team The Merkins. He is known to have used several jokes about the merkin in recent times.