Old English wyrresta, from Proto-Germanic *wers-ista- (source also of Old Saxon wirsista, Old Norse verstr, Old Frisian wersta, Old High German wirsisto), superlative of PIE *wers- (1) "to confuse, mix up" (see war (n.)). Phrase in the worst way (1839) is from American English sense of "most severely." The adverb is Old English wyrst; the noun, "that which is most evil or bad," is from late 14c.
"damage, inflict loss upon," c. 1600, from worst (adj.). Meaning "defeat in argument" is from 1650s. Related: Worsted; worsting.