1530s, "not subject to dispensation," from Medieval Latin *indispensabilis, from in- "not, opposite of" (see in- (1)) + dispensabilis, from Latin dispensare "disburse, administer, distribute (by weight)" (see dispense). Meaning "necessary" is from 1690s. From 17c. into 19c. often spelled indispensible, but modern dictionaries considered this improper.
As a noun, "indispensable thing," from 1794; c. 1800-1810, after French use, it was the name of a type of pocket bag worn by women. indispensables (1820) also was one of the many 1820s jocular euphemisms for "trousers" (see inexpressible). Related: Indispensably.