The classic version of the story is preserved in Hyginus, the Roman mythographer, and concerns the fate of a king named Lykaon, whose name was taken to be related to the Greek word for wolf, lykos.
To Lycaon, son of Pelasgus, Jupiter is said to have come as a guest and to have seduced his daughter Callisto. From this union was born Arcas, who named the land after his own name. But the sons of Lycaon wanted to test Jove, whether he be a god; they mixed together human flesh with other meat, and they set it before him at a feast. After he perceived this, he overturned the table in anger, and he killed the sons of Lycaon with a thunderbolt. At that place Arcas afterward fortified a town, which was called Trapezus. The father [i.e., Lycaon] Jupiter changed into the form of a wolf.
Hyginus, Fabulae, 176 (my translation)
This myth was closely related to the ritual enacted at Lykaian Zeus' shrine in Arcadia. Plato, in the Republic, is the first author to tell us about the werewolf in the temple: “The story goes that he who tastes of the one bit of human entrails minced up with those of other victims is inevitably transformed into a wolf…” (565d ff.; trans. Paul Shorey). Pausanias amplifies this with additional details about the alleged transformation of man to wolf following a human sacrifice:
It is said, for instance, that ever since the time of Lycaon a man has changed into a wolf at the sacrifice to Lycaean Zeus, but that the change is not for life; if, when he is a wolf, he abstains from human flesh, after nine years he becomes a man again, but if he tastes human flesh he remains a beast for ever.
Pausanias, Description of Greece 8.2.6 (trans. W. H. S. Jones)
That men have been turned into wolves, and again restored to their original form, we must confidently look upon as untrue, unless, indeed, we are ready to believe all the tales, which, for so many ages, have been found to be fabulous. But, as the belief of it has become so firmly fixed in the minds of the common people, as to have caused the term "Versipellis" to be used as a common form of imprecation, I will here point out its origin. Euanthes, a Grecian author of no mean reputation, informs us that the Arcadians assert that a member of the family of one Anthus is chosen by lot, and then taken to a certain lake in that district, where, after suspending his clothes on an oak, he swims across the water and goes away into the desert, where he is changed into a wolf and associates with other animals of the same species for a space of nine years. If he has kept himself from beholding a man during the whole of that time, he returns to the same lake, and, after swimming across it, resumes his original form, only with the addition of nine years in age to his former appearance. To this Fabius adds, that he takes his former clothes as well. It is really wonderful to what a length the credulity of the Greeks will go! There is no falsehood, if ever so barefaced, to which some of them cannot be found to bear testimony.
Pliny, Natural History 8.34 (trans. Bostock and Riley)