The term derives from Middle Iranian terms xvatay, xwadag meaning "lord", "ruler", "master", appearing in written form in Parthian kwdy, in Middle Persian kwdy, and in Sogdian kwdy. It is the Middle Persian reflex of older Iranian forms such as Avestan xva-dhata- "self-defined; autocrat", an epithet of Ahura Mazda. The Pashto term Xwdāi (خدای) is an Eastern Iranian cognate.
Prosaic usage is found for example in the Sassanid title katak-xvatay to denote the head of a clan or extended household or in the title of the 6th century Khwaday-Namag "Book of Lords", from which the tales of Kayanian dynasty as found in the Shahnameh derive.
Semi-religious usage appears, for example, in the epithet zaman-i derang xvatay "time of the long dominion", as found in the Menog-i Khrad. The fourth and eighty-sixth entry of the Pazend prayer titled 101 Names of God, Harvesp-Khoda "Lord of All" and Khudawand "Lord of the Universe", respectively, are compounds involving Khuda. Application of khuda as "the Lord" (Ahura Mazda) is represented in the first entry in the medieval Frahang-i Pahlavig.
It also exists as a loanword, used for God by Muslims in Bengali, Urdu, although the Arabic word Allah is becoming more common as religious scholars have deemed it more appropriate. This change is opposed by those who hold spiritual views such as Sufis.
- Edalji Kersâspji Antiâ, Pazend texts, Bombay 1909, pp. 335–337.
- The Milli Gazette, OPI, Pharos Media (2004-03-15). "Khuda Hafiz versus Allah Hafiz: a critique, The Milli Gazette, Vol.5 No.05, MG99 (1–15 Mar 04)". Milligazette.com. Retrieved 2012-05-25.