Something I wrote on this sub 5 years ago for a similar question:

In a 2008 oral history of 'YMCA' in Spin magazine, members of the Village People and one of their producers, Henri Belolo, explain the genesis of the song. According to David Hodo (the construction worker in the Village People):

It was 1977, and we were leaving a photography session on 23rd Street. Jacques Morali saw the big pink YMCA on 23rd and asked, “What is this YMCA, anyway? “And after laughing at his accent, we told him the Y was a place where you could go when you first came to New York when you didn’t have any money — you can stay there for very little. And of course, someone joked, “Yeah, but don’t bend over in the showers. “And Jacques, bless his heart, said, “I will write a song about this!”

The Jacques mentioned by Hodo is Jacques Morali, a French producer who was the (co-)writer and producer of all of the Village People's biggest hits; Morali was gay, and sadly passed away in 1991 from AIDS.

In the group itself, there was a mix of sexualities in the Village People, with some members identifying as straight, some being ambiguous in print about it, and some identifying as gay. For instance, another member of the Village People - Victor Willis, the lead singer of 'YMCA' is notable for being quite insistent that he is heterosexual; he married the actress who played Clair Huxtable on the Cosby Show. Willis has a co-write on the song, and Randy Jones (the cowboy in the Village People) says in the Spin oral history that:

It was not intended as a gay anthem. Do you have the lyrics in front of you? There’s nothing gay about them. I think Victor wrote the words, but it’s all a big fucking mystery. The guy who really deserves the credit is Horace Ott, who arranged the horns and strings. Jacques had the ideas, but Horace transformed them into songs.

In contrast, Hodo says in the same article that :

“Y.M.C.A.” certainly has a gay origin. That’s what Jacques was thinking when he wrote it, because our first album [1977’s Village People] was possibly the gayest album ever. I mean, look at us. We were a gay group. So was the song written to celebrate gay men at the YMCA? Yes. Absolutely. And gay people love it.

According to a 2013 analysis of the song and the relationship between the YMCA and 1970s gay culture in The Believer by Nicole Pasulka:

At the Y, a spiritual man was a well-built, muscular man. The organization’s leadership positioned the regional branches as destinations that could protect newcomers from “negative” influences. It was here that many young guys had their first homosexual experiences. So Jacques Morali and Randy Jones were part of a history that included both diligent Christian bodybuilders and men cruising for “trade”—straight-identified, masculine men.

Pasulka and the Spin oral history both portray the YMCA as a place with an official anti-homosexuality policy, but a culture where homosexuality was often common. Pasulka also portrays the YMCA culture as becoming less gay towards the end of the 1970s, and becoming closer to mainstream culture, comparing it to the Village People's acceptance by the mainstream.

By all accounts, in a world where much of gay culture was very underground, the fairly obvious gay subtext of the Village People to modern viewers was less obvious at the time to the mainstream - there wasn't much public knowledge about what Pasulka calls 'clone culture'; gay stereotypes at the time were very feminised. In contrast to the feminised stereotype, the Village People cast a knowing look at heterosexual masculine stereotypes with their choice of dress - cowboys, construction workers, etc - and the knowing look was missed by a lot of the mainstream at the time. This meant that the Village People could deny the gay subtext was there when they felt it was appropriate - and for Victor Willis who may have written some or all of the lyrics, there really might have been no gay subtext.

According to contemporary reports, the YMCA floated suing the Village People for defamation because of the implications of homosexuality, but didn't go through it - in the context of 'clone culture' etc, and Willis's denials of homosexuality it would have been quite awkward to prove. In contrast, the YMCA is now more relaxed about the gay overtones; their media relations manager said to Spin in 2008 that "We at the YMCA celebrate the song. It’s a positive statement about the YMCA and what we offer to people all around the world."

As to the long term impact, in the 1990s, according to the Spin oral history, the song began to be used in sports settings in America, encouraged by team managers and the like who thought the song would be a crowd pleaser. According to, for instance, the director of stadium operations at the Brevard County Manatees:

There are a handful of songs that just make you get up and dance. At our ballpark, “Y.M.C.A.” has to be considered one of them. “Y.M.C.A.” is a gay song? Honestly, I had no clue.