from Wikipedia:

http://en.wikipedia.org/wiki/Canada&

The name Canada comes from a Wendat (Huron-Iroquoian) word, kanata, meaning "village" or "settlement".[1] In 1535, inhabitants of the area near present-day Quebec City used the word to direct the French explorer Jacques Cartier towards the village of Stadacona, a settlement on the site of present-day Quebec City. Another contemporary translation of kanata was "land"[2]. Cartier used the word 'Canada' to refer to not only that village, but the entire area subject to Donnacona, Chief at Stadacona.[3]. By 1547, maps made by early European explorers show that the name rivière de Canada was given to the nearby St. Lawrence River; the river was called Kaniatarowanenneh ("big waterway") in Mohawk, coincidentally and reinforcingly similar to kanata.

While the First Nations origin for the name Canada is now generally accepted, other possible explanations have been put forward in the past. One theory suggested that the name originated when Spanish explorers, not having explored the northern part of the continent, wrote acá nada ("nothing here") on that part of their maps.[4] A similar tale credits Portuguese explorers who, upon seeing the eastern coastline, declared a similar sentiment (cá nada há).[citation needed] However, the Spanish word for the country, Canadá, has an accent over the last letter, and sounds very little like acá nada. (The word canada without the accent does exist in the Spanish language and means "greyed" as in hair.)