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According to Wikipedia:
The Damocles of the anecdote was a courter in the court of Dionysius II of Syracuse, a fourth century BC tyrant. Damocles exclaimed that, as a great man of power and authority, Dionysius was truly fortunate. Dionysius offered to switch places with him for a day, so he could taste first hand that fortune. In the evening a banquet was held where Damocles very much enjoyed being waited upon like a king. Only at the end of the meal did he look up and notice a sharpened sword hanging directly above his head by a single horse-hair. Immediately, he lost all taste for the fine foods and beautiful boys and asked leave of the tyrant, saying he no longer wanted to be so fortunate. Dionysius had successfully conveyed a sense of the constant fear in which the great man lives
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