Willoughby Waterleys, in the Guthlaxton Hundred of Leicestershire, is an Anglo-Scandinavian compound from Anglian wilig ‘a willow-tree’ and Old Norse by ‘a farmstead, a village’. This is a common hybrid place-name and in most cases of usage it is a Scandinavianized form of Old English wiligtun ‘farmsted or village where the willows grow’. Some names of this type may conceal the Old English wiliga-beag ‘a circle of willow-trees’.

Willoughby is a well-watered parish and lies on gravel and clay between two arms of the Whetstone Brook and has many large pools in its vicinity. Therefore its affix Waterleys from Old English leah ‘a forest, wood, glade, clearing; (later) a pasture, meadow’ and Old English wæter (Old English) ‘water, a river, a lake’ is appropriate. The affix was likely added at a later date to distinguish this Willoughby from Willoughby on the Wolds just beyond the Nottinghamshire boundary to the north.