"torn or worn scrap of cloth," early 14c., probably from a Scandinavian source (compare Old Norse rögg "shaggy tuft, rough hair," earlier raggw-; Old Danish rag; see rug), or else a back-formation from ragged. It also may represent an unrecorded Old English cognate of Old Norse rögg. In any case, from Proto-Germanic *rawwa-, from PIE root *reue- (2) "to smash, knock down, tear up, uproot" (see rough (adj.)).
Also in Middle English "a hard, rough piece of stone" (late 13c.). As an insulting term for "newspaper, magazine" it dates from 1734; slang for "tampon, sanitary napkin" is attested from 1930s (on the rag "menstruating" is from 1948). Rags "tattered clothing" is from mid-14c.; in the jocular sense of "personal clothing" it is attested by 1855 (singular), American English. Rags-to-riches as a description of a tale of a rise from poverty to wealth is attested by 1896. Rag-picker is from 1860; rag-shop, one selling old clothes, is from 1829.