scrap of cloth, early 14c., probably from Old Norse rögg "shaggy tuft," earlier raggw-, or possibly from Old Danish rag (see rug), or a back-formation from ragged, It also may represent an unrecorded Old English cognate of Old Norse rögg. In any case, from Proto-Germanic *rawwa-, from PIE root *reue- (2) "to smash, knock down, tear up, uproot" (see rough (adj.)).
As an insulting term for "newspaper, magazine" it dates from 1734; slang for "tampon, sanitary napkin" is attested from 1930s (on the rag "menstruating" is from 1948). Rags "personal clothing" is from 1855 (singular), American English. Rags-to-riches "rise from poverty to wealth" is attested by 1896. Rag-picker is from 1860; rag-shop from 1829.