This breed originated in Yorkshire (and adjoining Lancashire), a rugged region in northern England. In the mid-19th century, workers from Scotland came to Yorkshire in search of work and brought with them several defferent varieties of small terriers. Breeding of the Yorkshire terrier was "principally accomplished by the people - mostly operatives in the woollen mills - in the counties of Yorkshire and Lancashire. Details are scarce. **Mrs M A Foster is quoted as saying in 1886 "If we consider that the mill operatives who originated the breed.....were nearly all ignorant men, unaccustomed to imparting information for public use, we may see some reason why reliable facts have not been easily obtained.
In the early days of the breed, "almost anything in the shape of a Terrier having a long coaat with blue on the body and fawn or silver coloured head and legs, with tail docked and ears trimmed, was received and admired as a Yorkshire Terrier", but in the late 1860s, a poplar Paisley type Yorkshire Terrier show dog named Huddersfield Ben, owned by a woman living in Yorkshire, **Mary Ann Foster, was seen at dog shows throughout Great Britain, and he defined the breed type for the Yorkshire Terrier.
Huddersfield Ben was a famous dog. His portrait was painted by George Earl and in 1891 an authority on the breed wrote "Huddersfield Ben was the best stud dog of his breed during his lifetime, and one of the most remarkable dogs of any pet breed that ever lived, and most of the show specimens of the present day have one or more crosses of his blood in their pedigree." A show winner, Huddersfield Ben quickly became the type of dog everyone wanted, and through his puppies has defined the breed as we know it today. He is still referred to as "the father of the breed".
Yorkshire Terriers - Mrs Foster's "Huddersfield Ben" and Lady Giffard's "Katie" ca1870.
All the above information and pictures courtesy of Wikipedia.