Bully \bool-ee\ noun;
1. A blustering, quarrelsome, overbearing person who habitually badgers and intimidates smaller or weaker people
This word dates to the 1530's from Dutch boel ("lover, brother") and originally meant "sweetheart." The Dutch word is probably a diminutive of Middle High German buole ("brother"), which is of uncertain origin. By the 17th century, the meaning had evolved from "fine fellow" to "blusterer" to "harasser of the weak." How exactly the drastic change in meaning happened is up for debate, but it may have been influenced by bull ("male bovine"). Perhaps the missing link is a definition of bully that existed around 1700: "protector of a prostitute."
Around the time of the Civil War there was a U.S. slang phrase bully to you!, which reflected an earlier positive sense of the word ("worthy, jolly, admirable") dating to the 1680's.