'bug-infested' is a compound formed from 'bug' + 'infested'. 'bug' (meaning insect) comes from Middle English 'bugge' (originally 'a frightening thing' or 'hobgoblin') and later developed the sense 'insect'. 'infested' comes from Latin 'infestare' (via Old French/Latin forms), where 'in-' meant 'in' or 'into' and 'festare' was related to attacking or troubling.

'bug' changed from Middle English 'bugge' (a frightening creature) to modern English 'bug' meaning 'insect'; 'infestare' (Latin) passed into Old French and Middle English forms of the verb 'infest', eventually giving modern English 'infest' and its past participle 'infested'. The compound 'bug-infested' developed by combining the noun and past-participle adjective.

Initially, 'bug' could mean a frightening supernatural being and 'infest' meant to attack or trouble; over time 'bug' shifted to mean 'insect' and 'bug-infested' came to mean 'full of insects' and later also gained a figurative meaning 'full of defects or software bugs'.