1539, from German or French protestant, from Latin protestantem (nominative protestans), present participle of protestari (see protest (n.)). Originally used of German princes and free cities who declared their dissent from ("protested") the decision of the Diet of Speyer (1529), which reversed the liberal terms allowed Lutherans in 1526.
When forced to make their choice between obedience to God and obedience to the Emperor, they were compelled to choose the former. [Thomas M. Lindsay, "A History of the Reformation," New York, 1910]
The word was taken up by the Lutherans in Germany (Swiss and French preferred Reformed). It became the general word for "adherents of the Reformation in Germany," then "member of any Western church outside the Roman communion;" a sense first attested in English in 1553.
In the 17c., 'protestant' was primarily opposed to 'papist,' and thus accepted by English Churchmen generally; in more recent times, being generally opposed to 'Roman Catholic,' or ... to 'Catholic,' ... it is viewed with disfavour by those who lay stress on the claim of the Anglican Church to be equally Catholic with the Roman. [OED]
Often contemptuous shortened form Prot is from 1725, in Irish English. Protestant (work) ethic (1926) is taken from Max Weber's work "Die protestantische Ethik und der 'Geist' des Kapitalismus" (1904). Protestant Reformation attested by 1680s.