'cybersquatting' originates from modern English, formed by combining the prefix 'cyber-' (from 'cybernetics', ultimately from Greek 'kybernētēs' meaning 'steersman, governor') and the noun 'squatting' (from 'squat').

'cybersquatting' is a late 20th-century compound coined as the commercial use of the internet grew; 'cyber-' entered English via 'cybernetics' in the mid-20th century, while 'squat' comes from Middle English 'squatten' (from Old French roots meaning 'to crouch'), and together they produced the modern term in the 1990s referring to bad-faith domain registration.

Initially, the components referred separately to things 'relating to computers/governance' (cyber-) and 'to crouch or occupy' (squat); over time the compound came to mean specifically 'registering or holding domain names in bad faith to profit from another's trademark', a sense tied to internet commerce and trademark law.