The origin is unclear, although some say it comes as an abbreviation of the word Waterloo, as in Napoleon's ill-fated battle. Learn more here ... http://en.wikipedia.org/wiki/Toilet

First the disclaimer: this is entirely from memory, so I could be wrong. It comes from the French for water: l'eau. In the middle ages it was customary to empty chamber pots from the upstairs windows of houses. This could be a bit disconcerting if you happened to be walking underneath, so it was customary to shout the phrase 'Gardez l'eau!' - watch out for the water. With the inimitable English pronunciation of French words (for example, 'mouton' became 'mutton') this phrase turned into 'Gardy Loo!'

Refer to the following question as there are excellent answers there. Does anyone know the origin of the word 'loo'?

I heard it had something to do with Waterloo, but I do like the possibility of it being from "l'eau"m, as mentioned by Prunesquallor. That makes sense to me. Oxford questions gives a number of possibilities: There are several theories about the origin of this common term for a familiar article of sanitary furniture. The first, and most popular, is that it is derived from the cry of 'gardyloo' (from the French regardez l'eau 'watch out for the water') which was shouted by medieval servants as they emptied the chamber-pots out of the upstair windows into the street. This is historically problematic, since by the time the term 'loo' is recorded, the expression 'gardyloo' was long obsolete. A second theory is that the word derives from a polite use of the French term le lieu ('the place') as a euphemism. Unfortunately, documentary evidence to support this idea is lacking. A third theory, favoured by many, refers to the trade name 'Waterloo', which appeared prominently displayed on the iron cisterns in many British outhouses during the early 20th century. This is more credible in terms of dates, but corroborating evidence is still frustratingly hard to find. Various other picturesque theories also circulate, involving references to doors numbered '00' or people called 'Looe'. http://www.askoxford.com/asktheexperts/faq/aboutwordorigins/loo This origin site gives these: "loo" (Word Origins) This British colloquial word for "toilet" was established usage by the 1920s. Suggested origins include: French _lieu d'aisance_ = "place of easement" French _On est prie de laisser ce lieu aussi propre qu'on le trouve_ = "Please leave this place as clean as you find it" French _Gardez l'eau!_ = "Mind the water!" (supposedly said in the days before modern plumbing, when emptying chamber pots from upper-storey windows. According to Chris Malcolm (cam@aifh.ed.ac.uk), this phrase is still sometimes used by common folk in Edinburgh when heaving water or slops, and tour guides say that it originated there circa 1600.) "louvre" (from the use of slatted screens for a makeshift lavatory) "bordalou" (an 18th-century ladies' travelling convenience) "looward" or "leeward" (the sheltered side of a boat) "lee", a shepherd's shelter made of hurdles "lieu", as in "time off in lieu", i.e., in place of work done "lavatory", spoken mincingly "Lady Louisa Anson" (a 19th-century English noblewoman whose sons took her name-card from her bedroom door and put it on the guest lavatory) a misreading of room number "100" (supposedly a common European toilet location) a "water closet"/"Waterloo" joke. (James Joyce's _Ulysses_ (1922) contains the following text: "O yes, _mon loup_. How much cost? Waterloo. water closet.") http://www.yaelf.com/aueFAQ/mifloo.shtml Yet another possibility is that it is a shortening of the song refrain "toorala-loo ralal-attiday", and so is a euphemism. ie "I'm just off to the tooralalooralaattiday..."