The municipality (originally the parish) is named after the Audnedalen valley (), but over time the name was shorted due to a corruption of the language. The first element is the genitive case of the river name Auðna (now Audna). The river name is derived from the word  which means "destruction" or "wasteland" (because of the flooding that often happens along the river).
The municipality, initially known as a parish, takes its name from the picturesque valley of Audnedalen, although it has undergone linguistic simplification. The name Auðna, now spelled Audna, originates from the Old Norse word for "destruction" or "barrenness," reflecting the region's propensity for flooding.