She is probably a development of the Old English feminine demonstrative pronoun sēo. Although she was a lexical alteration of an Old English pronoun, its grammatical place in Middle English was not determined by its lexical predecessor's grammatical place in Old English. According to Dennis Baron's Grammar and Gender:
In 1789, William H. Marshall records the existence of a dialectal English epicene pronoun, singular "ou": "'Ou will' expresses either he will, she will, or it will." Marshall traces "ou" to Middle English epicene "a", used by the 14th centuryEnglish writerJohn of Trevisa, and both the OED and Wright's English Dialect Dictionary confirm the use of "a" for he, she, it, they, and even I. This "a" is a reduced form of the Anglo-Saxonhe = "he" and heo = "she". By the 12th and 13th centuries, these had often weakened to a point where, according to the OED, they were "almost or wholly indistinguishable in pronunciation." The modern feminine pronoun she, which first appears in the mid twelfth century, seems to have been drafted at least partly to reduce the increasing ambiguity of the pronoun system...
Thus in Middle English the new feminine pronoun she established itself to satisfy a linguistic need.
Usage
When by convention feminine gender is attributed to things, she is used instead of it to denote it.
When natural realities and social realities are personified as feminine, she denotes them as well.
"Stanley had been ridiculing the habit of personifying the Church as a woman, and speaking of it tenderly as she." — George C. Brodrick, Memory and Impressions 252
"With all the pompous titles... bestowed upon France, she is not more than half so powerful as she might be." — The Annual Register III. Miscellaneous Essays 203
" told the Ambassadour, that the Turkes army was at Malta, and that she had saccaged the towne." — Thomas Washington tr. Nicholay's Voyages i. xiii. 14 b
She is also used attributively with female animals, as in she-ass, -ape, -bear, -dragon, -wolf, -lion. In early modern Englishshe was occasionally prefixed to masculine nouns in place of the feminine suffix-ess.
"They took her for their Patroness, and consequently for their she God." — Daniel Brevint, Saul and Samuel at Endor, vii. 161.
Sometimes she is prefixed to nouns to attribute feminine character to or emphasize or intensify the feminine attributes of a thing:
"Some she-malady, some unhealthy wanton, Fires thee verily." — Robinson Ellis, The poems and fragments of Catullus, vi. 4
"Correlative to the he-man is the she-woman, who is equally undesirable." — B. Russell, New Hopes for changing World 162
Instead of her, she has been used as an object or after a preposition both in literary use or vulgarly as an emphatic oblique case.
" 'I hope—our presence did not inconvenience—the young lady?' 'Bless your heart, sir! nothing ever inconveniences she'." — Miss Dinah Mulock Craik, John Halifax, gentleman x.
The use of she for I is common in literary representations of Highland English.
" 'And here she comes,' said Donald, as Captain Dalgetty entered the hall." — Walter Scott, A Legend of Montrose iv.
"He" and "she" are sometimes used colloquially as adjectives or nouns to distinguish gender, e.g.
"he goat" for "billy goat".
"The cat's a she. It's had six kittens in the night. We were told that it was a he."
