Originally (in late Middle English) sinister meant ‘malicious, underhand’; in the late 16th century, the sense of ‘inauspicious, unfavourable’ developed, especially as denoting omens seen on the left hand, which was regarded as the unlucky side. From this in turn developed the current sense, giving the impression that something harmful or evil is happening or will happen.
In heraldry, of, on, or towards the left-hand side (in a coat of arms, from the bearer's point of view, i.e. the right as it is depicted); the opposite of dexter.
See also bend sinister.