The Cotswold sheep derives its name from the Cotswold Hills region in south-central England, where the breed developed over centuries becoming central to the region's medieval wool trade prosperity. The term "Cotswold" itself comes from "cot" meaning sheep enclosure and "wold" meaning rolling hills, creating a place name meaning "sheep hills" that became synonymous with the distinctive longwool sheep grazing those landscapes. This geographic designation immediately identifies the breed's English origins and connection to one of history's most important wool-producing regions.
Historically, Cotswold sheep were known by various regional names reflecting their economic importance and widespread recognition. Terms including "Cotswold Lion" referenced the breed's impressive size and majestic appearance with abundant curly fleece resembling a lion's mane. "Cotswold Long Wool" or simply "Cotswold Longwool" emphasized the breed's most distinctive characteristic, distinguishing it from shortwool breeds. Medieval wool merchants knew Cotswold wool as "Cotswold wool," a designation that commanded premium prices in European markets where English longwool was highly prized for its quality and processing characteristics.
The breed played such a significant role in English wool history that Cotswold wool and sheep were referenced in medieval economic records, guild regulations, and trade documents spanning centuries. The phrase "riding on sheep's back" describing England's medieval economic prosperity referred partly to Cotswold and similar longwool breeds whose wool generated substantial wealth. This economic importance meant Cotswolds were carefully guarded, with export restrictions at various periods protecting England's wool trade advantages. When eventually exported, Cotswolds established flocks in many countries though always retaining the Cotswold designation honoring their English origins.
Within fiber and heritage livestock communities, Cotswolds are often simply called "Cotswolds" with the understanding that this indicates a specific heritage breed with distinctive characteristics. Hand spinners and fiber artists particularly value the breed, with "Cotswold fleece" or "Cotswold locks" indicating premium longwool fiber with specific processing characteristics. The Livestock Conservancy lists Cotswold sheep as a heritage breed of conservation priority, recognizing their historical importance and relatively small contemporary populations compared to commercial breeds. Conservation-focused breeders sometimes emphasize "traditional Cotswolds" or "heritage Cotswolds" to distinguish animals maintained according to historical breed standards from those showing influence from modern commercial breeding.

