烏龍 is black dragon, and 茶 is tea, so 烏龍茶 is black dragon tea.
*Pronunciation
Oolong (烏龍 wu lùhng) rhymes with the name of the peninsula area of Hong Kong, Kowloon (九龍 gáu lùhng). That second character 龍 is also the first character for lobster (龍蝦 lùhng hā), dragon shrimp.
Origin Stories
There are a few origin stories for the name (literally black dragon). One is that oolong tea evolved from a Dragon-Phoenix tribute tea and later renamed Black Dragon. Another theory for the name is that oolong tea first existed in the Wuyi Mountains region. Another story is that the tea was discovered by a man named Wu Liang, who accidentally let the tea leaves ferment (after getting distracted by a deer).
Oolong, the Mandarin pronunciation (also similar to the Cantonese pronunciation), is a brown tea with slightly fermented leaves and moderate caffeine content (less than that of black tea but more than green tea).