late 12c., "God's unmerited favor, love, or help," from Old French grace "pardon, divine grace, mercy; favor, thanks; elegance, virtue" (12c., Modern French grâce), from Latin gratia "favor, esteem, regard; pleasing quality, good will, gratitude" (source of Italian grazia, Spanish gracia; in Church use translating Greek kharisma), from gratus "pleasing, agreeable," from PIE *gwreto-, suffixed form of root *gwere- (2) "to favor."
Sense of "virtue" is early 14c., that of "beauty of form or movement, pleasing quality" is mid-14c. In classical sense, "one of the three sister goddesses (Latin Gratiæ, Greek Kharites), bestowers of beauty and charm," it is first recorded in English 1579 in Spenser. In music, "an embellishment not essential to the melody or harmony," 1650s. As the name of the short prayer that is said before or after a meal (early 13c.; until 16c. usually graces) it has a sense of "gratitude." As a title of honor, c. 1500.
c. 1200, "to thank," from Old French graciier "thank, give thanks to; praise," from grace "mercy, favor, thanks, virtue" (see grace (n.)). Meaning "to show favor" (mid-15c.) led to that of "to lend or add grace to something" (1580s, as in grace us with your presence), which is the root of the musical sense in grace notes (1650s). Related: Graced; gracing.