"wanting courage to face danger or endure harm or pain," 1550s, from coward + -ly (1). The adverb (late 14c., from -ly (2)) is older than the adjective:
Yit had I levir do what I may Than here to dye thus cowerdelye ["Le Morte d'Arthur," c. 1450]
An Old English word for "cowardly" was earg, which also meant "slothful." Related: Cowardliness.