During the Civil War, in July 1862 when the Army of the Potomac was in camp, Brig. Gen. Daniel Butterfield summoned Pvt. Oliver Wilcox Norton, his brigade bugler, to his tent. Butterfield, who disliked the colorless "extinguish lights" call then in use, whistled a new tune and asked the bugler to sound it for him. After repeated trials and changing the time of some notes which were scribbled on the back of an envelope, the call was finally arranged to suit Gen. Butterfield and used for the first time that night. Pvt. Norton, who on several occasions, had sounded numerous new calls composed by his commander, recalled his experience of the origin of "Taps" years later:

"One day in July 1862 when the Army of the Potomac was in camp at Harrison's Landing on the James River, Virginia, resting and recruiting from its losses in the seven days of battle before Richmond, Gen. Butterfield summoned the writer to his tent, and whistling some new tune, asked the bugler to sound it for him. This was done, not quite to his satisfaction at first, but after repeated trials, changing the time of some of the notes, which were scribbled on the back of an envelope, the call was finally arranged to suit the general.

"He then ordered that it should be substituted in his brigade for the regulation "Taps" (extinguish lights) which was printed in the Tactics and used by the whole army. This was done for the first time that night. The next day buglers from nearby brigades came over to the camp of Butterfield's brigade to ask the meaning of this new call. They liked it, and copying the music, returned to their camps, but it was not until some time later, when generals of other commands had heard its melodious notes, that orders were issued, or permission given, to substitute it throughout the Army of the Potomac for the time-honored call which came down from West Point.

In the western armies the regulation call was in use until the autumn of 1863. At that time the XI and XII Corps were detached from the Army of the Potomac and sent under command of Gen. Hooker to reinforce the Union Army at Chattanooga, Tenn. Through its use in these corps it became known in the western armies and was adopted by them. From that time, it became and remains to this day the official call for "Taps." It is printed in the present Tactics and is used throughout the U.S. Army, the National Guard, and all organizations of veteran soldiers.

Gen. Butterfield, in composing this call and directing that it be used for "Taps" in his brigade, could not have foreseen its popularity and the use for another purpose into which it would grow. Today, whenever a man is buried with military honors anywhere in the United States, the ceremony is concluded by firing three volleys of musketry over the grave, and sounding with the trumpet or bugle "Put out the lights. Go to sleep"...There is something singularly beautiful and appropriate in the music of this wonderful call. Its strains are melancholy, yet full of rest and peace. Its echoes linger in the heart long after its tones have ceased to vibrate in the air."

Source: http://www.arlingtoncemetery.org/ceremonies/originoftaps.html