In Pre-Islamic Iran, the lute became the dominant stringed instrument gradually over a thousand years after its invention in Mesopotamia around 2300 BCE. This was probably a millennium after the origin of the harp, also a popular stringed instrument in Iran. The Persian word 'rud' is thought to possibly be an origin for the Arabic word al-ud.
Although the lute is thought to predate the oud in archeology, in mythology the oud came first, and has a gruesome backstory. According to the medieval Islamic scholar Al-Farabi one of the descendants of Cain, Lamak, hung the dead body of his son from a tree to decay slowly as it swung. The dangling skeleton provided the inspiration for the stringed shape of the instrument.
If you were curious what would happen if the ancient oud was used to play more modern music, check out this version of Michael Jackson's Smooth Criminal. (Link courtesy of the awesome