"expose false or nonsensical claims or sentiments," 1923, from de- + bunk (n.2); apparently first used by U.S. novelist William Woodward (1874-1950), in his best-seller "Bunk;" the notion being "to take the bunk out of things." It got a boost from Harold U. Faulkner's "Colonial History Debunked" [Harper's Magazine, December 1925], which article itself quickly was debunked, and the word was in vogue in America in the mid-1920s. Related: Debunked; debunking.
Wets and Drys, Fundamentalists and Modernists, are busily engaged in debunking one another to the delight and edification of a public which divides its time between automobiling and listening-in. Is it art, or education, or religion that you prefer? You have only to get the right station and what you last heard about the matter will be cleverly debunked while you wait. [Carl Vernon Tower, "Genealogy 'Debunked'", in "Annual Reports of the Tower Genealogical Society," 1925]
It was, naturally, execrated in England.
The origin of to debunk is doubtless the same as that of American jargon in general -- the inability of an ill-educated and unintelligent democracy to assimilate long words. Its intrusion in our own tongue is due partly to the odious novelty of the word itself, and partly to the prevailing fear that to write exact English nowadays is to be put down as a pedant and a prig. [letter to the editor, London Daily Telegraph, March 2, 1935, cited in Mencken, "The American Language"]