Etymology

ME and later forms of the fem. subject pron. in /ʃ/ closely resemble neither OE hīo, hēo nor the words for ‘she’ in either ON (whether the h-type represented by OIcel hón and the modern languages, or the VAN alternative su) or the other Gmc. languages (cp. OFris hiū, cognate with the OE form, next to OS siu, OHG si(u), sī(u), Go si). There have been various attempts to explain ME /ʃ/ as a result of contact with Norse, based mainly on circumstantial evidence of distribution (see attestation) and many authorities are highly sceptical (see further Howe 1996:148-54, and esp. Britton 1991). The possibilities are: (1) a direct loan of a Scandinavian pron. (some early accounts connect it with ON sjá ‘this’ (nom. sg. masc./fem.)) (rejected outright by OED); (2) the effects of Norse-influenced pronunciation on native hīo (stress-shift of the diphthong to produce an initial [hj], plus a change of [hj] > [ʃ] paralleled in some Norw dialects and in place-names like Shetland < Hjaltland); or (3) derivation from the fem. demonstrative OE sīo ‘that’, which came to be used as a personal pron. (perhaps encouraged by the propensity for original demonstratives to be used personally in ON) and again underwent a stress-shift (then initial [sj] > [ʃ]). 

PGmc Ancestor

Proposed ON Etymon (OIcel representative)

(1) sjá ‘this’ 
(ONP (1) sjá (1) (pron. dem.))

Other Scandinavian Reflexes

OE Cognate

(1) hīo 'she'; (3) sīo (demonstrative pron.) ‘that’

Phonological and morphological markers

Summary category

DD1c

Attestation

Forms of the pron.with spellings implying initial /ʃ/  first occur in the 12c.(earliest in ChronE s.a. 1140; see SPS); they are characteristically N and E early on, but by the 14c. variants of the she-type are widespread (though note the early exception cited by MED from c1175(OE) Bod.Nativ.Virg.(Bod 343) at 117/14).  See further LALME dot maps 10–20.

Occurrences in the Gersum Corpus

Gaw 969, 1259, 1550 etc.; Pe 758; WA 241, 257, 268 etc.

Bibliography

MED shē (pron.) , OED she (pron., n. and adj.) , Dance scho, SPS 500; (1) de Vries sjá (3), Mag. sjá (3) (2) Orel *xī/xĭ, AEW hio (1), OED3 hoo (pron. and n.1) ; (3) Orel *sa, Kroonen *þa-, AEW sio (1), OED the (adj., pron.2, and n.2)