"larva of a butterfly or moth," mid-15c., catyrpel, probably altered (by association with Middle English piller "plunderer;" see pillage (n.)) from Old North French caterpilose "caterpillar" (Old French chatepelose), literally "shaggy cat" (probably in reference to the "wooly-bear" variety), from Late Latin catta pilosa, from catta "cat" (see cat (n.)) + pilosus "hairy, shaggy, covered with hair," from pilus "hair" (see pile (n.3)).
Compare also French chenille "caterpillar," literally "little dog." A Swiss German name for it is teufelskatz "devil's cat." "The caterpillar has in many idioms received the name of other animals" [Kitchin, who cites also Milanese cagnon "little dog," Italian dialectal gattola "little cat," Kentish hop-dog, hop-cat, Portuguese lagarta "lizard."] Compare also American English wooly-bear for the hairy variety. An Old English name for it was cawelworm "cole-worm." Caterpillar tractor, one which travels on endless steel belts, is from 1908, so called from its way of moving.