late 14c., "taking words in their natural meaning" (originally in reference to Scripture and opposed to mystical or allegorical), from Late Latin literalis/litteralis "of or belonging to letters or writing," from Latin litera/littera "letter, alphabetic sign; literature, books" (see letter (n.1)). Related: Literalness.
Meaning "of or pertaining to alphabetic letters" is from late 14c. Meaning "concerned with letters and learning, learned, scholarly" is from mid-15c. Sense of "verbally exact, according to the letter of verbal expression" is attested from 1590s, as is application to the primary sense of a word or passage. Literal-minded is attested from 1791.