17c. spelling change of indico (1550s), "blue powder obtained from certain plants and used as a dye," from Spanish indico, Portuguese endego, and Dutch (via Portuguese) indigo, all from Latin indicum "indigo," from Greek indikon "blue dye from India," literally "Indian (substance)," neuter of indikos "Indian," from India (see India).
Replaced Middle English ynde (late 13c., from Old French inde "indigo; blue, violet" (13c.), from Latin indicum). Earlier name in Mediterranean languages was annil, anil (see aniline). As "the color of indigo" from 1620s. As the name of the violet-blue color of the spectrum, 1704 (Newton).