Brazil is named after the brazilwood tree (Paubrasilia echinata), a native species that was once abundant along the Brazilian coast. Known as pau-brasil in Portuguese, the tree was highly valued by 16th-century explorers for its dense, orange-red heartwood, which was used to produce a valuable red dye for the European textile industry. The word brasil is derived from the Portuguese word brasa, meaning "ember" or "glowing charcoal". This refers to the bright red color of the dye extracted from the wood.

When Portuguese explorers first arrived in 1500, they initially named the land Ilha de Vera Cruz (Island of the True Cross) and later Terra de Santa Cruz (Land of the Holy Cross). However, due to the massive economic importance of the brazilwood trade, the region became colloquially known as Terra do Brasil ("Land of Brazilwood"), which eventually became the official name.