The word 'toddy' entered English in the late 16th century from the colonial context of the British in India. It originates from the Hindi "ṭaṛī," denoting the fermented sap drawn from palm trees, which itself derives from the Sanskrit "tāḍī," a term for a specific palm. The meaning evolved in English from referring specifically to this palm sap wine to a more general term for a hot, sweetened alcoholic beverage, typically made with spirits, water, and spices. This shift reflects the adaptation of an exotic term to describe a familiar Western style of prepared drink.

The word is a simplex loanword. It is borrowed from the Hindi word "ṭaṛī," which refers to the sap of various palm trees, and ultimately from the Sanskrit "tāḍī," a kind of palm tree.