Carter told the music website Taste of Country that Berg was inspired to write the song after having been out on the town. According to Carter, the two began talking about relationships, when Carter said, "Yeah, it's just like men… they get in your blood!" Also, Carter added several references to California, because she was living there at the time.
Chesney first heard the song when he and Carter toured together in 2003. He said that he identified with it more after he rented a house in Malibu, California, and chose to record "You and Tequila" because it reminded him of driving the Pacific Coast Highway. He also told National Public Radio host David Green that "there are some commonalities about getting someone out of your mind and drinking and trying to quit."
Chesney and Potter's version of the song is set in the musical key of F♯ major with a vocal range from F♯3 to D♯5. The main chord pattern is F♯5-F♯/A♯-Bsus2-F♯5.
Chesney's version of the song has received positive reviews. Chris Talbott of the Associated Press called it a "melancholy love-hate song", and an uncredited review in HitFix called the song "exquisite" and one of Chesney's "career high notes". Bobby Peacock of Roughstock rated the song four-and-a-half stars out of five, praising Chesney's and Potter's vocals and the "understated simplicity" of the lyrics. Bill Friskics-Warren of The Washington Post thought that the song had an Americana influence and made the album Chesney's "most stylistically wide-ranging to date."