"The name of the group itself originates from the Wudang (or Wu-Tang) Mountains in the Hubei province of China, which are a traditional center of Chinese martial arts; The RZA and Ol' Dirty Bastard adopted the name for the group after seeing the kung-fu film Shaolin and Wu-Tang, which features a school of warriors trained in Wu-Tang style (many dialogue excerpts from the film were used on their debut album). The group have also developed various backronyms for the name (as hip hop pioneers like KRS One and Big Daddy Kane did with their names), including "We Usually Take All Niggas' Garments," "Witty Unpredictable Talent And Natural Game" and "Wisdom, Universe, Truth, Allah, Nation, and God"."
http://en.wikipedia.org/wiki/Wu-Tang_Clan