From Wikipedia:
The Damocles of the anecdote was an obsequious courtier in the court of Dionysius II of Syracuse, a 4th century BC tyrant of Syracuse, Italy. Pandering to his king, Damocles exclaimed that, as a great man of power and authority surrounded by magnificence, Dionysius was truly extremely fortunate. Dionysius then offered to switch places with Damocles, so that Damocles could taste that very fortune firsthand. Damocles quickly and eagerly accepted the king's proposal. Damocles sat down in the king's throne surrounded by every luxury, but Dionysius arranged that a huge sword should hang above the throne, held at the pommel only by a single hair of a horse's tail. Damocles finally begged the tyrant that he be allowed to depart, because he no longer wanted to be so fortunate.
Dionysius had successfully conveyed a sense of the constant fear in which the great man lives. Cicero uses this story as the last in a series of contrasting examples for reaching the conclusion he had been moving towards in this fifth Disputation, in which the theme is that virtue is sufficient for living a happy life. Cicero asks:
Does not Dionysius seem to have made it sufficiently clear that there can be nothing happy for the person over whom some fear always looms?