It is derived from the ancient Vanga or Banga Kingdom mentioned in the Mahabharata as located in eastern Bengal, which in turn is thought to preserve the name of a Dravidian-speaking tribe called the Bang who settled the region around the year 1000 BC.
Upon the restoration of independence, the name was deemed no longer appropriate since the historic kingdom comprised only the southern regions and ethnicities of the modern state. Names similar to Bhutan—including Bottanthis, Bottan, Bottanter—began to appear in Europe around the 1580s.
Jean-Baptiste Tavernier's 1676 Six Voyages is the first to record the name Boutan.
However, in every case, these seem to have been describing not modern Bhutan but the Kingdom of Tibet.
The modern distinction between the two did not begin until well into George Bogle's 1774 expedition—realizing the differences between the two regions, cultures, and states, his final report to the East India Company formally proposed labeling the Druk Desi's kingdom as "Boutan" and the Panchen Lama's as "Tibet".
Despite this difference, the present name was chosen by the Musavat to replace the Russian names Transcaucasia and Baku in 1918.