Well, according to The Band's own website, here are the lyrics, from the horse's mouth - J. Robbie Robertson:

THE NIGHT THEY DROVE OLD DIXIE DOWN
By J. R. Robertson. Album: The Band
© 1970 Canaan Music, Inc.

Virgil Caine is the name,
And I served on the Danville train,
'Til Stoneman's cavalry came
And tore up the tracks again.
In the winter of '65,
We were hungry, just barely alive.
By May the tenth, Richmond had fell,
It's a time I remember, oh so well,

(Chorus)
The Night They Drove Old Dixie Down,
And all the bells were ringing,
The Night They Drove Old Dixie Down,
And all the people were singin'.
They went La, La, La, La, La, La,
La, La, La, La, La, La, La, La, La

Back with my wife in Tennessee,
When one day she called to me,
"Hey Virgil, quick, come and see,
There goes Robert E. Lee!"
Now I don't mind choppin' wood,
And I don't care if the money's no good.
Ya take what ya need and ya leave the rest,
But they should never have taken the very best.

(Chorus)

Like my father before me,
I will work the land,
Like my brother above me,
Who took a rebel stand.
He was just eighteen, proud and brave,
But a Yankee laid him in his grave,
I swear by the mud below my feet,
You can't raise a Caine back up when he's in defeat.

(Chorus and fade)

There's also a long discussion on the meaning of the words on that website too...