"insect," 1620s (earliest reference is to bedbugs), of unknown origin, probably but not certainly from or influenced by Middle English bugge "something frightening, scarecrow" (late 14c.), a meaning obsolete since the "insect" sense arose except in bugbear (1570s) and bugaboo (q.v.).
Probably connected with Scottish bogill "goblin, bugbear," or obsolete Welsh bwg "ghost, goblin" (cf. Welsh bwgwl "threat," earlier "fear," Middle Irish bocanách "supernatural being"). Some speculate that these words are from a root meaning "goat" (see buck (n.1)) and represent originally a goat-like spectre. Cf. also bogey (n.1) and German bögge, böggel-mann "goblin." Perhaps influenced in meaning by Old English -budda used in compounds for "beetle" (cf. Low German budde "louse, grub," Middle Low German buddech "thick, swollen").
Meaning "defect in a machine" (1889) may have been coined c.1878 by Thomas Edison (perhaps with the notion of an insect getting into the works). Meaning "person obsessed by an idea" (e.g. firebug) is from 1841, perhaps from notion of persistence. Sense of "microbe, germ" is from 1919. Bugs "crazy" is from c.1900. Bug juice as a slang name for drink is from 1869, originally "bad whiskey." The 1811 slang dictionary has bug-hunter "an upholsterer." Bug-word "word or words meant to irritate and vex" is from 1560s.