late 14c., "pouring out of wine in honor of a god," from Latin libationem (nominative libatio) "a drink-offering," noun of action from past-participle stem of libare "pour out (an offering)," perhaps from PIE *lehi- "to pour out, drip" (source of Greek leibein "to pour, make a libation").
This is from an enlargement of the PIE root *lei- "to flow" (source also of Sanskrit riyati "to let run;" Greek aleison "a cup for wine, goblet;" Lithuanian lieju, lieti "to pour," lytus "rain;" Hittite lilai- "to let go;" Albanian lyse, lise "a stream;" Welsh lliant "a stream, a sea," llifo "to flow;" Old Irish lie "a flood;" Breton livad "inundation;" Gaelic lighe "a flood, overflow;" Gothic leithu "fruit wine;" Old Church Slavonic liti, lêju, Bulgarian leja "I pour;" Czech liti, leji, Old Polish lić "to pour"). Transferred sense of "liquid poured out to be drunk" is from 1751. Related: Libations.