The Lupercalia was a very ancient, possibly pre-Roman pastoral festival, observed on February 13 through February 15 to avert evil spirits and purify the city, releasing health and fertility. The Lupercalia was believed in antiquity to have some connection with the Ancient Greek festival of the Arcadian Lycaea (from Ancient Greek: λύκος — lykos, "wolf", Latin lupus) and the worship of Lycaean Pan, the Greek equivalent to Faunus, as instituted by Evander. 

Plutarch  described Lupercalia:

    Lupercalia, of which many write that it was anciently celebrated by shepherds, and has also some connection with the Arcadian Lycaea. At this time many of the noble youths and of the magistrates run up and down through the city naked, for sport and laughter striking those they meet with shaggy thongs. And many women of rank also purposely get in their way, and like children at school present their hands to be struck, believing that the pregnant will thus be helped in delivery, and the barren to pregnancy.[2]

The Lupercalia festival was partly in honor of Lupa, the she-wolf who suckled the infant orphans, Romulus and Remus, the founders of Rome.[3] Explaining the name of the festival, Lupercalia, or "Wolf Festival." The festival was celebrated near the cave of Lupercal on the Palatine (where Rome was founded, see Livy, Book I), to expiate and purify new life in the Spring. The Lupercal cave, which had fallen into a state of decay, was rebuilt by Augustus; the celebration of the festival had been maintained, as we know from the famous occurrence of it in 44 BC. A highly decorated cavern 50 feet below Augustus' palace in the correct approximate location was discovered by archeologists in October 2007, that may prove to be the Lupercal cave when analyzed.

The religious ceremonies were directed by the Luperci, the "brothers of the wolf (lupus)", a corporation of priests of Faunus, dressed only in a goatskin, whose institution is attributed either to the Arcadian Evander, or to Romulus and Remus. The Luperci were divided into two collegia, called Quinctiliani (or Quinctiales) and Fabiani, from the gens Quinctilia (or Quinctia) viz. gens Fabia; at the head of each of these colleges was a magister. In 44 BC. a third college, Luperci Julii, was instituted in honor of Julius Caesar, the first magister of which was Mark Antony. In imperial times the members were usually of equestrian standing.

The festival began with the sacrifice by the Luperci (or the flamen dialis) of two male goats and a dog. Next two patrician young Luperci were led to the altar, to be anointed on their foreheads with the sacrificial blood, which was wiped off the bloody knife with wool soaked in milk, after which they were expected to smile and laugh; the smearing of the forehead with blood probably refers to human sacrifice originally practised at the festival.[citation needed]

The sacrificial feast followed, after which the Luperci cut thongs from the skins of the victims, which were called Februa, dressed themselves in the skins of the sacrificed goats, in imitation of Lupercus, and ran round the walls of the old Palatine city, the line of which was marked with stones, with the thongs in their hands in two bands, striking the people who crowded near. Girls and young women would line up on their route to receive lashes from these whips. This was supposed to ensure fertility, prevent sterility in women and ease the pains of childbirth. This tradition itself may survive (Christianised, and shifted to Spring) in certain ritual Easter Monday whippings.

source: http://en.wikipedia.org/wiki/Lupercalia