1580s, from Middle French médaille (15c.), from Italian medaglia "a medal," according to OED from Vulgar Latin *metallea (moneta) "metal (coin)," from Latin metallum (see metal). The other theory [Klein, Barnhart, Watkins] is that medaglia originally meant "coin worth half a denarius," and is from Vulgar Latin *medalia, from Late Latin medialia "little halves," neuter plural of medialis "of the middle" (from PIE root *medhyo- "middle"). Originally a trinket or charm; as a reward for merit, proficiency, etc., attested from 1751.
1845, "stamped onto a medal," from medal (n.). From 1857 as "to award (someone or something) a medal;" intransitive sense is 20c. Related: Medaled; medalled; medaling; medalling.