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In a 2007 interview, Diamond stated the inspiration for his song was John F. Kennedy's daughter, Caroline, who was eleven years old at the time it was released. Diamond sang the song to her at her 50th birthday celebration in 2007. On December 21, 2011, in an interview on CBS's The Early Show, Diamond said that a magazine cover photo of Caroline Kennedy as a young child on a horse with her parents created an image in his mind, and the rest of the song came together about five years after seeing the picture. However, in 2014 Diamond said the song was about his then-wife Marcia, but he needed a three-syllable name to fit the melody. The song has proven to be enduringly popular and, as of November 2014, has sold over two million digital downloads in the United States.
The song reached No. 4 on the Billboard Hot 100 chart the week ending August 16, 1969, and was certified gold by the RIAA on August 18, 1969, for sales of one million singles. "Sweet Caroline" was also the first of fifty-eight entries on the US Easy Listening chart, peaking at #3.
In the autumn of 1969, Diamond performed "Sweet Caroline" on several television shows. It later reached No. 8 on the UK singles chart in 1971.
There are three distinct mixes of this song. In the original mono 45 mix, the orchestra and glockenspiel are more prominent than in the stereo version on the Brother Love's Travelling Salvation Show LP. The third version was a remix found only on the initial CD release of Diamond's His 12 Greatest Hits. This version has the orchestra mixed down and has the background vocals mixed up. It has a longer fade as well. A live version of the song is on his Hot August Night LP.
During the COVID-19 pandemic, Diamond changed some of the lyrics to "Hands ... washing hands ... don't touch me ... I won't touch you."
Since 2008, the University of Pittsburgh has used "Sweet Caroline" as an unofficial school sing-along song by inserting "Let's Go Pitt!" over the instrumental three-beat "Ba ba ba" interval after the title refrain and replacing the repeated phrase "So good" with "Go Pitt!" The song started as a rallying anthem played between the third and fourth quarters of Pittsburgh Panthers football games, but has been adopted for use during other university sports contests, alumni events, and student ceremonies, including graduation commencement ceremonies, and references to the song have appeared on various school merchandise.
"Sweet Caroline" is sometimes part of the regular rotation of songs during sports events at other universities, and although noted as not as being a tradition specific to or uniquely associated with Pennsylvania State University, out of a speculated concern with the song's lyrics in the wake of the Penn State child sex abuse scandal, the university removed the song from the rotation of music played at football games prior to the 2012 season. However, performances resumed to loud renditions at Penn State football games in September 2013.
Several days after the Boston Marathon bombing in April 2013, Neil Diamond led the crowd at Fenway Park in a rendition of the song.
Sales of the song surged nearly 600 percent in the week after the bombings, to 19,000 copies, up from 2,800 the week before. Diamond said that he would donate his royalties from those sales to the One Fund Boston charity to help the people affected by the bombings.
The song is popular in Britain and has been adopted by many football clubs including Oxford United and Arsenal.
It is also used by the Castleford Tigers rugby league team upon victory at their home ground, The Jungle, over a rival club.