In the beginning, the people later called Jews were called Hebrews in the Bible or Bnei Yisrael, which is translated as Children of Israel or Israelites.
When the Israelites broke into two kingdoms after the death of King Solomon, the northern kingdom was called Israel, after the ancestor Jacob, who was also called Israel. The southern kingdom was comprised of two tribes, but the largest by far was the tribe of Judah. As a result, people thought of the area as the area of Judah, and hence the name of the area became Judah and all the people in the nation were called Judeans. (Like America and Americans.)
Later when the northern ten tribes were defeated in 722 BCE, sent into exile, and disappeared, although many of them escaped to Judah, all of the people living in this area continued to be called Judeans. (Like an Englishman becoming a citizen of America is called an American.)
Soon, the word Judean was shortened to Jew. However, the Hebrew for Jews is Yehudim. How did the Y become a J? Sometime back, when Hebrew words were transliterated into English and other languages, the practice was to transliterate the Hebrew yud as a J. Thus Yerushalayim became Jerusalem, Yeshu became Jesus, Yehoshua became Joshua. The scholars were not consistent. Luckily yisrael did not become Jisrael, but Israel. Also, among many other instances, Yeshayahu became Isaiah.
