'gem-encrusted' originates as an English compound of 'gem' and the past participle 'encrusted'. 'gem' ultimately comes from Latin 'gemma' meaning 'precious stone', and 'encrusted' comes from French 'encruster' (en- + 'cruste'/'crusta') where 'crusta' meant 'crust' or 'hard outer layer'.

'encrust' entered English via Old French/Medieval Latin forms related to 'crusta' and developed into English 'encrust' (verb), whose past participle 'encrusted' combined with 'gem' to create the descriptive compound 'gem-encrusted'.

Initially related to forming or having a hard crust or coating, the element 'encrust' came to mean 'to cover or decorate a surface' and in 'gem-encrusted' specifically denotes being covered or decorated with gems.