The name Dyfed developed from the name of the Demetae, the people associated with this part of Roman Britain. It is not simply an Irish pronunciation of the Latin Demetia. Early medieval traditions connect some of the kingdom's ancestry with Ireland, especially the Déisi migration narrative. The Expulsion of the Déisi tells of Eochaid and his descendants crossing to Demed and supplies a royal genealogy. This is a medieval account of origins, not direct proof that Roman officials recruited a particular group as coastal guards or that a precisely recorded marriage transferred the whole kingdom.

In the First Branch of the Mabinogi, Pwyll rules the seven cantrefs of Dyfed. While hunting in Glyn Cuch, he drives another hunter's white, red-eared hounds from a slain stag. Their owner is Arawn, ruler of Annwn. Pwyll's discourtesy leads to an agreement under which the two exchange appearances and positions for a year. Pwyll defeats Arawn's rival Hafgan and honours the trust placed in him, while Arawn governs Dyfed well. Their friendship explains Pwyll's title Pen Annwn. It does not turn the tale into a historical merger of two kingdoms or make Pwyll the permanent ruler of every Welsh Otherworld tradition.

At the mound of Arberth, Pwyll sees Rhiannon riding past but cannot catch her until he asks her to stop. She chooses him as a husband, yet his careless promise at the marriage feast allows Gwawl to claim her. Rhiannon supplies the plan and the bag through which Pwyll defeats that claim at a later feast. These negotiations occur at her father's court, so not every episode is set within Dyfed itself. When the couple returns to Pwyll's realm, their household becomes the setting of another crisis: a newborn son disappears, and Rhiannon's attendants falsely accuse her of killing him.

Rhiannon is made to remain near the court entrance and offer to carry visitors while repeating the accusation against herself. Elsewhere, Teyrnon of Gwent encounters a mysterious attack on his mare's foal and discovers a child. He and his wife raise the boy, later recognising his resemblance to Pwyll and returning him. The restored child becomes known as Pryderi. The narrative connects Dyfed with Gwent through fosterage and the correction of a false charge. Similar names and shared figures in Arthurian lists invite comparison, but they do not prove that these literary rulers belonged to the same historical generation as Arthur.

Dyfed's inscribed stones provide evidence independent of the tales. The Latin and ogham memorial from Castell Dwyran has often been connected with Vortipor, whom Gildas calls a ruler of the Demetae. Linguistic analysis, however, distinguishes the name on the stone from Gildas's form, so that identification should remain qualified. Neither the stone nor other ogham memorials identifies every commemorated person as a Déisi prince. In the tenth century, the combination of Dyfed with territories ruled by Hywel Dda contributed to Deheubarth. The older name remained meaningful in regional identity and literary memory, long after the kingdom's independent political history had changed.