The name Kelly is derived from the Irish Gaelic surname Ó Ceallaigh, which means "descendant of Ceallach". Ceallach was an ancient Irish personal name that may have meant "bright-headed" or "frequenting churches".

The name Kelly originated in Ireland, where it was first used as a surname for descendants of the family of Ceallach. It later transitioned into use as a given name, likely in the 19th century during a period of increased Irish immigration to English-speaking countries.

One of the earliest recorded instances of the name Kelly being used as a first name is Kelly Miller, an African American mathematician, sociologist, and author who was born in 1863. Another notable early bearer of the name was Kelly Petillo, an American baseball player who was born in 1892.

In the early 20th century, the name Kelly gained popularity as a feminine given name, likely influenced by the fame of actresses such as Kelly Dempster (1892-1949) and Kelly Emberg (1903-1993). The name was also borne by Kelly Myrna (1908-1951), a Danish actress and singer.

One of the most famous bearers of the name Kelly was Kelly Johnson (1910-1990), an American aeronautical engineer who played a leading role in the design of several famous aircraft, including the Lockheed U-2 and SR-71 Blackbird reconnaissance aircraft.

Another notable Kelly was Kelly Reichardt (born 1964), an American film director and screenwriter known for films such as Old Joy and Meek's Cutoff. Other famous Kellys include Kelly Clarkson (born 1982), an American singer and songwriter, and Kelly Holmes (born 1970), a British former athlete who won gold medals in the 800m and 1500m events at the 2004 Athens Olympics.