According to Eileen Yin-Fei Lo, author of Chinese Kitchen (Morrow, 1999) what we know as General Tso's Chicken is actually a classic Hunan dish called "chung ton gai," or "ancestor meeting place chicken." Other sources place the origin of General Tso's Chicken more recently, in New York City. The creation of General Tso's Chicken has been attributed to two different chefs, Chef Peng and T.T. Wang, in the early 1970s.
The connection between the the real General Tso and the concoction that bears his name is tenuous at best. It is highly unlikely that General Tso himself ate the dish; General Tso's Chicken (also General Tsung's chicken or General Tsao's chicken) is more common in overseas Chinese restaurants than in China itself.
What's the connection, then? As the Chinese say, mei(2) you(3) guan(1) xi(0). Literally, there is no connection. Colloquially, it doesn't matter. General Tso was famous, the name is simple and easy for foreigners to pronounce, and it sounds impressive.
General Tso outranks Colonel Sanders.
Besides, unlike the Venerable and Inscrutable Colonel, his military rank was legitimate.
It hit me one day that KFC Barbecue tastes an awful lot like General Tso's Chicken.
Sources: Michael Browning, The Washington Post, Wednesday, April 17, 2002; Page F01 Who Was General Tso And Why Are We Eating His Chicken?