The story of Lycaon is a Greek Myth in which Zeus turns Lycaon and his sons into wolves.
Within the world of Teen Wolf the story has been expanded to explain the creation of shapeshifting werewolves and the relationship between shapeshifters and druids.
This is the story as presented by Werewolf Hunter Gerard in the episode Visionary.
According to myth, some Greek citizens believed they owed their lives more to Prometheus than to the gods of Olympus. Some followers even took names to honor the titans instead of the gods like Deucalion who is named after the son of Prometheus.
Lycaon didn’t just refuse to honor the gods, he challenged them. He invited Zeus to a banquet where he tried to serve him the flesh of a human being. Angered, Zeus blew the place apart with his lightning bolts and then punished Lycaon and his sons by turning them into wolves.
Editor’s Note: The story up until this point segues pretty well with the actual real world myth, the next portion seems to be made up specifically as a part of Teen Wolf Mythology
Lycaon sought out the druids to help turn him back to human. The belief was that the ancient druids knew how to shape shift. They couldn't make Lycaon and his sons human again but they did teach him how to shift back and forth. And so the druids became important advisers to the packs.