"fictitious prose narrative," 1560s, from Italian novella "short story," originally "new story, news," from Latin novella "new things" (source of Middle French novelle, French nouvelle), neuter plural or fem. of novellus "new, young, recent," diminutive of novus "new" (see new). Originally "one of the tales or short stories in a collection" (especially Boccaccio's), later (1630s) "long prose fiction narrative or tale," a type of work which had before that been called a romance.
A novel is like a violin bow; the box which gives off the sounds is the soul of the reader. [Stendhal, "Life of Henri Brulard"]
The word was used earlier in English in the now-obsolete senses "a novelty, something new," and, in plural, "news, tidings" (mid-15c.), both from Old French novelle.