from the Online Etymology Dictionary
1640s, “animating spirit,” from L. psyche, from Gk. psykhe “the soul, mind, spirit, breath, life, the invisible animating principle or entity which occupies and directs the physical body” (personified as Psykhe, the lover of Eros), akin to psykhein “to blow, cool,” from PIE root *bhes- “to blow” (cf. Skt. bhas-). The word had extensive sense development in Platonic philosophy and Jewish-influenced theological writing of St. Paul. In English, psychological sense is from 1910.