Although many people associate “Doolally” with Scottish, the etymology of the expression is actually tied to the Indian subcontinent.
“Doolally” derives from the name of the Deolali Transit Camp, which was a British Army camp near Mumbai, India. The camp itself was frequently referred to by army personnel as “Doolally.” It began seeing use as a slang term for mad behavior in the early 1900s, as the soldiers, having to wait long intervals at Deolali for a ship taking them home, began breaking down from the unbearable Indian summers. This mental breakdown was referred to by British soldiers as “Doolally Tap”, which derived from the camp’s name, paired with the Hindustani word for fever; tapa.
The expression was used for all sorts of diseases and mental problems, but the most prominent of these were the aforementioned heatstroke, as well as malaria.
With a large number of troops stationed in India during World War 2, “Doolally” gained further prominence in Great Britain and future Commonwealth countries, adding to the notoriety of Deolali Transit Camp.
“Doolally” became a popular slang expression for crazy behavior all across the British Isles, and even occurring in Australia.
Today, many people associate it with Scottish people, constructing false etymologies from various Gaelic roots; however, these are all unfounded.
A likely explanation for the Scottish connection with “Doolally” may lie in the typical “oo” vowels, frequently encountered in a Scottish accent.
Despite this, “Doolally” is not exclusive to Scotland, in fact, it is very well present in the whole of the Anglosphere, although with a limited representation in the United States.
The slang term was referenced by the popular UK rapper, Ocean Wisdom, on his 2016 album, Chaos ’93, giving one of his songs the title “Doolally.”