mid-12c., "freedom from civil disorder," from Anglo-French pes, Old French pais "peace, reconciliation, silence, permission" (11c., Modern French paix), from Latin pacem (nominative pax) "compact, agreement, treaty of peace, tranquility, absence of war" (source of Provençal patz, Spanish paz, Italian pace), from PIE root *pag- "to fasten" (which is the source also of Latin pacisci "to covenant or agree;" see pact), on the notion of "a binding together" by treaty or agreement.
It replaced Old English frið, also sibb, which also meant "happiness." Modern spelling is 1500s, reflecting vowel shift. Sense in peace of mind is from c. 1200. Used in various greetings from c. 1300, from Biblical Latin pax, Greek eirēnē, which were used by translators to render Hebrew shalom, properly "safety, welfare, prosperity."
Sense of "quiet" is attested by 1300; meaning "absence or cessation of war or hostility" is attested from c. 1300. As a type of hybrid tea rose (developed 1939 in France by François Meilland), so called from 1944. Native American peace pipe is recorded by 1760. Peace-officer is attested from 1714. Peace offering is from 1530s. Phrase peace with honor dates to 1607 (in "Coriolanus"). The U.S. Peace Corps was set up March 1, 1962. Peace sign, both the hand gesture and the graphic, attested from 1968.