The etymology is unknown; it is from at least 1940 in American English, and may have come from a calque in German, but there's not much evidence for this. In any case, it's covered in detail by Brian Joseph's [*What Gives with* What Gives?][1]. Here's an excerpt:

> The construction seems clearly to have
> originated in American English; the
> first attestation for *what gives* comes
> in 1940, in John O'Hara's Pal Joey,
> according to Wentworth and Flexner
> (1960: 574, s.v. *what gives*) and the
> *Oxford English Dictionary* (1989
> on-line second edition).


  [1]: http://babel.ucsc.edu/Jorge/joseph.html