The word grunge originated as a slang term for “dirt” or “filth”. Mark Arm the vocalist for the Seattle band Green River—and then Mudhoney—is generally credited as being the first to use the term grunge to describe the movement. Arm first used the term in 1981, when he wrote a letter under his given name Mark McLaughlin to the Seattle fanzine Desperate Times, criticizing his band Mr. Epp and the Calculations as “Pure grunge! Pure noise! Pure shit!” Clark Humphrey, editor of Desperate Times, cites this as the earliest use of the term to refer to a Seattle band, and mentions that Bruce Pavitt of Sub Pop popularized the term as a musical label in 1987–88, using it on several occasions to describe Green River. Arm used grunge as a descriptive term rather than a genre term, but it eventually came to describe the punk/metal hybrid music of the Seattle music scene during that time.

A seminal release in the development of grunge was 1986’s Deep Six compilation, released by C/Z Records. The record featured multiple tracks by six bands: Green River, Soundgarden, the Melvins, Malfunkshun, Skin Yard, and The U-Men; Later that year saw the release of the Sub Pop 100 compilation and Green River’s Dry As a Bone EP as the first releases for the label.

Grunge Music from Wikipedia