From Oracle FAQ

The name Oracle refers to either:

Oracle database, the famous database management system (DBMS) that is widely used for business applications, and runs on most mainframe, micro, and personal computers; or

Oracle Corporation, the name of the company that sells the Oracle Database Management System.

Origin of the word ORACLE [ edit ]

IBM is an abbreviation for International Business Machines and SUN is an acronym for Stanford University Network (or Networking). However, the word ORACLE is neither an abbreviation nor an acronym (see an English dictionary for the meaning of the word oracle). It appears in uppercase because this is the branding style Oracle Corp. chose for itself.

The word Oracle means: Prophecy or prediction; answer to a question believed to come from the gods; a statement believed to be infallible and authoritative; a shrine at which these answers are given

So why is it named Oracle?

Legend has it that Larry Ellison and Bob Miner were working on a consulting project for the CIA (Central Intelligence Agency in USA) where the CIA wanted to use this new SQL language that IBM had written a white paper about. The code name for the project was Oracle (the CIA saw this as the system to give all answers to all questions or something such ;-).

The project eventually died (of sorts) but Larry and Bob saw the opportunity to take what they had started and market it. So they used that project's codename of Oracle to name their new RDBMS engine. Funny thing is, that the CIA was one of Oracle's first customers...

Further speculation:

We received a lot of E-mails recently stating that ORACLE stands for Oak Ridge Automatic Computer and Logical Engine, a computer built by Oak Ridge National Laboratory in the 1950's. For some time this was the fastest computer in the world. It reportedly could do 100 man-years of calculations in an eight-hour work shift. However, we don't believe this has anything to do with the Oracle Database or Oracle Corporation. However, if you have information to the contrary, please let us know.

Yet another mail stated that Oracle stands for Orbital Relational Analytical Computing Logical Equation. Absolutely amazing! As expected, a Google search on this returned zero hits.

Some jokingly refer to ORACLE as One Real A$#@%& called Larry Ellison.