1540s, in alchemy, "composed of contrasting elements which, in proper proportion, neutralize each other," also, of states, rulers, etc., "refraining from taking sides in a fight, not engaged on or interfering with either side" (probably from a similar meaning of neutralis in Medieval Latin), from Latin neutralis, from neuter "neither the one nor the other, neither of two" (see neuter (adj.)).
By 1550s of persons. Chemistry sense of "exhibiting neither acid nor alkaline qualities" is from 1660s. From 1711 in the sense of "of or belonging to a power not taking sides in a war or conflict." Of colors, "of low chroma, without positive quality of color," from 1821. Neutral corner is from boxing (1908), indicating the two corners of the ring not used between rounds by the fighters and their seconds.
mid-15c., "one who takes no part in a contest between others, one who has a neutral opinion," from Latin neutralis "of neuter gender," (see neutral (adj.)). Meaning "disengaged position in gear mechanisms" is by 1905.