Eric Arthur Blair, author of such famous books as Nineteen Eighty-Four and Animal Farm among many others, used the name George Orwell for his books. From the linked Wikipedia page (cited to Voorhees, The paradox of George Orwell):
The pen name "George Orwell" was inspired by the River Orwell in the English county of Suffolk.
Why did he decide to name himself after that river?
Blair originally submitted a list of four possible pseudonyms to his agent, Leonard Moore, telling Moore that he could make pick of the four1:
There are several reasons Blair chose to use a pen name at all, one being that he thought that "Blair" was "too Scottish"2. He wanted something English, and, from the research I've done, all of the above names are indeed English in origin ("Kenneth" is an Anglicization, but its connotations are probably less Scottish than "Blair"'s).
The reasons for "Orwell" even being on the list are a bit more complicated. Blair spent quite some time in Southwold in his 20s and 30s, where his parents were living. It's a coastal town in Suffolk, with the nearest large towns (relative to tiny Southwold) being Lowestoft, Norwich, and Ipswich. Orwell grew familiar with the area, including the coastal regions to the north and south. The River Orwell is about 40 miles to the south, running from Ipswich to the coast, and it is possible that Orwell was familiar with it.3 This page indicates that it may have been a stop during his journeys to London, which seems plausible.
By using "Orwell", Blair was playing homage to the area that led to much of his early writing. There's also a village of the same name in Cambridgeshire, about 60 miles from Southwold. There are, however, some questions. If he wanted the name to be after a Suffolk river, why not, for instance, use the River Blyth, which flows right through Southwold (perhaps the name's Scottish roots led to the same distaste as with "Blair")? These questions probably will never be answered; there is no evidence that the River Orwell had any special significance to him over any other place in Suffolk.4
We do have to consider, though, that Blair did not want to choose something that could be easily traced back to him or his family. Around the time of the publication of Down and Out in Paris and London, his first longer work (a memoir), he wrote
I would prefer the book to be published pseudonymously. I have no reputation that is lost by doing this and if the book has any kind of success I can always use the same pseudonym again.
Given that today, we have to look hard to see if there's any deeper connection between Blair and his name, it seems that for a while, he succeeded in distancing Eric Blair from George Orwell.
1 The text of the 1932 letter can be found here. In it, Blair lists the names and writes, "I would rather favour George Orwell". (Thank you Gallifreyan!)
2 "Too Scottish" has been quoted all over the Internet, but it's extremely difficult to find an original source for it. The best indication I can get is from a 1936 letter from Blair to Norah Myles, in which he writes, "The Blairs are by origin Lowland Scottish & dull". That's the only thing I can find referring to his family's name's history and Scotland.
3 The Dictionary of Pseudonyms states that the River Orwell was the river "on whose banks he had lived", which seems improbable, given the 40 miles of separation. It is quite possible, though, that Blair spent time in Ipswich and on the river.
4 Anonymous Speech: Literature, Law and Politics notes that it is possible that Blair considered "Orwell" while walking along the banks of the river with his father.
The source cited (The Paradox of George Orwell by Richard Voorhees) gives a simple reason for the choice of this name:
When he was twenty-seven, he took as a pseudonym the name by which he is generally known, Orwell, from a river in Suffolk near which he once lived, and George as a typical English name.
