early 15c., "extending toward the interior," from Medieval Latin internalis, from Latin internus "within, inward, internal," figuratively "domestic," expanded from pre-Latin *interos, *interus "on the inside, inward," from PIE *en-ter- (source also of Old Church Slavonic anter, Sanskrit antar "within, between," Old High German unter "between," and the "down" sense of Old English under); suffixed (comparative) form of root *en "in."
Meaning "situated within" is from 1590s. Meaning "of or pertaining to the domestic affairs of a country (as in internal revenue) is from 1795; the notion is "pertaining to the subject itself; independent of others." Internal-combustion in reference to an engine in which fuel is burned inside it, is from 1884. Related: Internally.
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