The name of the settlement was changed from Grahovo to Grahovo ob Bači (literally, 'Grahovo on the Bača River') in 1955. The name is believed to have the same origin as Grahovo in the Municipality of Cerknica. If so, it is probably derived from the personal name Grah, which is still preserved as a surname in Slovenia and is probably borrowed from the Old High German name Gracco. The place name would thus mean 'Grah's (village)'. Another possible derivation is from the common noun *grahovišče 'pea field' via the contracted form *grahovše. Direct derivation from the Slovene common noun grah 'pea' is unlikely because of the rarity of such names and the suffixation pattern.