The term malignant hallucination is indebted to the Latin words male (bad) and gignere (to entail, to bring forth). It was coined in or shortly before 1960 by the American psychiatrist Gordon Forrer to denote a hallucination occurring in the context of pathology and constituting a burden to the affected individual. Forrer uses the term in opposition to "benign hallucination. For a further discussion of Forrer's dichotomy of benign and malignant hallucinations, see the entry Benign hallucination.
References
Forrer, G.R. (1960). Benign auditory and visual hallucinations. Archives of General Psychiatry, 3, 95-98.
Dictionary of Hallucinations. J.D. Blom. 2010.