Our friends at Take Our Word Fot It say "...The phrase started life as redhand, a legal term from 15th century Scotland. It meant, basically, "red handed", as in caught red-handed. By the 16th century we find the Scottish phrase taken red-handed (or as the Scots put it, tane red-handed), and it wasn't until Walter Scott (a Scotsman) wrote Ivanhoe in 1819 that taken red-handed caught on in English and was caught red-handed by 1857.
Why red-handed, you ask? We heard one layperson suggest that it might be because of the dye bombs put in ransom money to mark and/or ruin the bills. Well, such bombs weren't in use in 15th century Scotland. This phrase's origin is more obvious than that: to be caught red-handed is to be caught with blood on one's hands, perhaps literally when the phrase was first used, but now it is a figurative sense. We'll leave you with this quotation from Scotland in 1609: Gif he is takin with reid or hait hand of slauchter ("if he is taken with red or hot hand of slaughter").