The name of the village evolved throughout the centuries from the original Lybenwerde into Liebwerda, or Libwerda. The first part of the name ‘Lieb’ means ‘nice, lovely’ in German, thus the literal translation of the full name is ‘a lovely island amidst marshes’.

Nevertheless, there are several other interpretations of the village name.  

The first settlers in the area, belonging to the Frýdlant estate and owned by the lords of Biberstein from 1278, spoke Swiss Italian wherein the word "li" means “place” and "verda"  means green, hence a green place.

Other etymological version is based on derivation from the expression "rio verda", i.e. green river, or brook, which would change into Riverda, and by further move into Liverda (see e.g. Rýbrcoul, or Líbrcoul – Krakonoš, from German Rubenzahl).

Finally, there is one more alternative derived from a German etymological tale mentioning a love heart bearing the inscription "Lieb, Ward´ da!" – that is Love, stay here!, engraved by Rýbrcoul the Tomcat for the fairy Jizera into an oak trunk. Later on Libverda people would use the love heart symbol to advertise the spa, or even decorate their official documents with it.  Another possible source of origin of the present village name may have been the assimilation of Liverda into Libverda under the influence of the similarly called Liberec (Liberk in those days), or combining the standard form Liverda with the common expression Liberda into the final name Libverda.

The village began to grow famous toward the end of the 14th century when the rumours about healing effects of the local spring began to spread. This happened especially thanks to the great number of pilgrims wandering mainly from Lusatia to the pilgrimage church of the Visitation of Our Lady in the nearby Hejnice, who would refresh themselves with the healing mineral water, referred to as „Divine Water“ as early as then. The same name was used by the pilgrims to call the spring itself. The fame of the village propagated with them so the place became well-known in the surrounding area in the 15th century.