The noun is derived from Late Middle English bon-fir, bonefire, bonnefyre 'fire in which bones are burnt, bonfire' , apparently from bon 'bone; series of connected bones regarded as a unit; bone-like part of the body such as a piece of cartilage, tooth, tusk, etc.; animal’s dewclaw' + fir 'fire'. Bon is derived from Old English bān 'bone'. The first element of the word has sometimes been assumed to be French bon 'good; correct, right'.

The Oxford English Dictionary (OED) notes that bonfires, originally lit as part of midsummer celebrations, were not generally associated with the burning of bones. However, the first edition of the OED (under the title A New English Dictionary on Historical Principles, 1887) stated that “for the annual midsummer ‘banefire’ or ‘bonfire’ in the burgh of Hawick [in Roxburghshire, Scotland], old bones were regularly collected and stored up, down to c. 1800”.

James A. H. Murray [et al.], editors (1884–1928), “Bonfire”, in A New English Dictionary on Historical Principles (Oxford English Dictionary), volume I (A–B), London: Clarendon Press, →OCLC, page 985, column 1.

In Modern Irish from XVII c., may be influenced by English 'bonfire'