The Collaborative International Dictionary of English v.0.48:

Bandanna \Ban*dan"na\, Bandana \Ban*dan"a\, n. [Hind.
   b[=a]ndhn[=u] a mode of dyeing in which the cloth is tied in
   different places so as to prevent the parts tied from
   receiving the dye. Cf. Band, n.]
   1. A species of silk or cotton handkerchief, having a
      uniformly dyed ground, usually of red or blue, with white
      or yellow figures of a circular, lozenge, or other simple
      form; -- it is often used as a neckerchief. The term is
      also used for any large and brightly colored handkerchief.
      [1913 Webster + WordNet 1.5]

   2. Hence: Any scarf worn on the neck or head, usually of
      large size.
      [PJC]

   3. A style of calico printing, in which white or bright spots
      are produced upon cloth previously dyed of a uniform red
      or dark color, by discharging portions of the color by
      chemical means, while the rest of the cloth is under
      pressure. --Ure.
      [1913 Webster]

WordNet (r) 3.0 (2006):

bandana
    n 1: large and brightly colored handkerchief; often used as a
         neckerchief [syn: bandanna, bandana]