Vermouth was originally used for medicinal purposes. It's botanicals were said to be helpful for aiding digestion and easing an upset stomach. As popular ingredient was wormwood, based on the belief that it was effective at treating stomach disorders and intestinal parasites.
It wasn't long before the herbal taste and appetite-inducing effects turned it into a beloved aperitif. It became increasingly popular for example in the United States around the 1870s, at one point even out-selling table wine. It soon worked its way into the rotation of bartenders, and solidified its place in history as an ingredient in some of the world's most iconic cocktails. Its true claim to fame is as an aperitif, with fashionable cafes in Turin serving it to guests around the clock. However, in the late 19th century it became popular with bartenders as a key ingredient in many classic cocktails that have survived to date such as the Martini, the Manhattan, the Rob Roy, and the Negroni.
Vermouth gained popularity in the 1950s with help from the Martini, which was being marketed by liquor companies. Product placement and celebrity endorsements from personalities such as Ernest Hemingway and Humphrey Bogart helped to increase the Martini's profile. However, the most successful advertiser of the Martini was of course James Bond.