Origin and history of uncle

c. 1300 (late 12c. as a surname), "brother of one's father or mother," from Old French oncle, from Latin avunculus "mother's brother" ("father's brother" was patruus), etymologically "little grandfather," diminutive of avus "grandfather."

This is reconstructed to be from PIE root *awo- "grandfather, adult male relative other than one's father" (source also of Armenian hav "grandfather," Hittite huhhas "grandfather," Lithuanian avynas "maternal uncle," Old Church Slavonic uji "uncle," Welsh ewythr "uncle"). Boutkan (along with de Vaan) says "the root probably denoted members of the family of the mother." 

It replaced Old English eam (usually maternal; paternal uncle was fædera), which represents the Germanic form of the same root (which is also the source of Dutch oom "uncle, grandfather, brother-in-law," Old High German oheim "maternal uncle, son of a sister," German Ohm "uncle," Old Norse afi "grandfather"). Also from French are German, Danish, Swedish onkel.

As a title preceding a proper name, mid-15c. As a familiar title of address to an old man, attested by 1793; in the U.S. South, especially "a kindly title for a worthy old negro" [Century Dictionary].

The slang meaning "pawnbroker" is by 1756, "in humorous allusion to the financial favors expected and sometimes received from rich uncles" [Century Dictionary].

Dutch uncle (and his blunt, stern, benevolent advice) is attested from 1838; Welsh uncle (1747) was the male first cousin of one's parent. To say uncle as a sign of submission in a fight is North American, attested from 1909, of uncertain signification.