The cakes have a small trinket (often a small plastic baby, sometimes said to represent Baby Jesus) inside, and the person who gets the piece of cake with the trinket has various privileges and obligations (such as buying the cake for the next celebration).

The "king cake" takes its name from the biblical three kings. Catholic tradition states that their journey to Bethlehem took twelve days (the Twelve Days of Christmas), and that they arrived to honor the Christ Child on Epiphany. The season for king cake extends from the end of the Twelve Days of Christmas (Twelfth Night and Epiphany Day), through to Mardi Gras day. Some organizations or groups of friends may have "king cake parties" every week through the Carnival season.

Related culinary traditions are the tortell of Catalonia, the gâteau des Rois in Provence or the galette des Rois in the northern half of France, and the Greek and Cypriot vasilopita. The galette des Rois is made with puff pastry and frangipane (while the gâteau des Rois is made with brioche and candied fruits). A little bean was traditionally hidden in it, a custom taken from the Saturnalia in the Roman Empire: the one who stumbled upon the bean was called "king of the feast." In the galette des Rois, since 1870 the beans have been replaced first by porcelain and, now by plastic figurines; while the gâteau des Rois Also known as "Rosca de Reyes" in Mexico.

Samuel Pepys (whose wife was French) recorded a party in London on Epiphany night, 6 January 1659/1660: "...to my cousin Stradwick, where, after a good supper, there being there my father, mothers, brothers, and sister, my cousin Scott and his wife, Mr. Drawwater and his wife, and her brother, Mr. Stradwick, we had a brave cake brought us, and in the choosing, Pall was Queen and Mr. Stradwick was King. After that my wife and I bid adieu and came home, it being still a great frost."

The choosing of King and Queen from the pie, usually by the inclusion of a bean and a pea, was a traditional English Twelfth Night festivity (see there for other early English references).

In southern U.S.A., the tradition was brought to the area by colonists from France and Spain. King cake parties in New Orleans are documented back to the eighteenth century.

The king cake of the New Orleans Mardi Gras tradition comes in a number of styles. The most simple, said to be the most traditional, is a ring of twisted bread similar to that used in brioche topped with icing or sugar, usually colored purple, green, and gold (the traditional Carnival colors) with food coloring. There are many variants, some with a filling, the most common being cream cheese and praline. Cajun king cakes are traditionally,deep fat fried as a doughnut would be. They are topped with sugar granules in the official Carnival colors of purple, green and gold. The purple represents the passion of Christ, the green represents hope and the gold the rewards of leading a Christian life.

It has become customary in the New Orleans culture that whoever finds the trinket must provide the next king cake.

The "roscón de reyes" in Spain is traditionally eaten on January 6, during the celebration of the "Día de Reyes" (Wise Men Day). In most of Spain, Mexico and sometimes Hispanic communities in the United States, this is the day when children get presents from the Three Wise Men (not from Santa). They leave a shoe outside, filled with hay or dried grass for the animals the Kings ride, before they go to bed along with a note. The Mexican “rosca de reyes” has an oval shape. For decoration, spanish people use dried and candied fruits like figs, quinces or cherries.

The tradition of placing a figurine of the Christ Child inside the cake is followed. Whoever finds it must take it to the nearest church on February 2 (Día de la Candelaria). The finder of the Niño Dios (bean, candy or baby doll) has the responsibility to take the family as well to church and celebrate the presentation of Jesus in the Temple. According to the Jewish tradition, an infant is presented to God in the temple 40 days after his birth. Día de la Candelaria on February 2 means the Light of Christ presented to God. Nowadays, the people who get the figurines in their piece of the cake usually agree to make a party on February 2, and to provide the guests with tamales and atole.