Public diplomacy is a term that is very closely associated with the United States Information Agency, which used it to describe its mission.

The terms public diplomacy and propaganda are closely related. The term public diplomacy clearly originated as a euphemism for propaganda. According to publicdiplomacy.org, a website sponsored by the USIA Alumni Association,

The term was first coined in the mid-1960s by Dean Edmund A. Gullion of the Fletcher School of Law and Diplomacy. Explaining the origin of the term, Gullion wrote (1967) that:

"Even beyond the organ of the Government set up to handle information about the United States and to explain our policies, what is important today is the interaction of groups, peoples, and cultures beyond national borders, influencing the way groups and peoples in other countries think about foreign affairs, react to our policies, and affect the policies of their respective governments.

"To connote this activity, we at the Fletcher School tried to find a name. I would have liked to call it 'propaganda.' It seemed like the nearest thing in the pure interpretation of the word to what we were doing. But 'propaganda' has always a pejorative connotation in this country. To describe the whole range of communications, information, and propaganda, we hit upon 'public diplomacy'."

The dictionary definition of the word propaganda is "The systematic propagation of a doctrine or cause or of information reflecting the views and interests of those advocating such a doctrine or cause." Notice that the definition says nothing about whether the material is or is not true; the essence of propaganda is that it is distributed with the intention of supporting a cause. The word literally means "that which ought to be propagated" and originated in the Catholic Church to describe the church agency responsible for evangelising. See the article on propaganda for more detail.

In the United States, however, the word "propaganda" carried and carries the connotation of falsehood. The USIA has always maintained that its agencies, such as the Voice of America, are truthful. In a famous remark, Edward R. Murrow, then directory of the USIA, said:

"Truth is the best propaganda and lies are the worst. To be persuasive we must be believable; to be believable we must be credible; to be credible we must be truthful. It is as simple as that."

Broadly, then, public diplomacy is a term used mostly by the USIA, in reference to truthful propaganda.