Bunny is Oscar the Grouch's sister & the sister of Ernest & Otto the Grouch. She appears in episode 4237 as a surprise guest for Grouchy Mother's Day. Her & Oscar's mother gave Bunny her name just to aggravate her. In April 2011, Oscar answered a couple questions about his sister in the following interview:
Was your mother also a Grouch?
Oh yes, I come from a long line of Grouches. I have a sister, her name is Bunny. Mom named her that just to tick her off. She’d rather have had a name like Geezelah or Grumpy, because she is, trust me, a grump.
Do you see her often?
Hopefully not, although it is kind of fun when she comes cause we argue the whole time. Grouches like a good argument. I'm only worried about this because I haven't been disagreeable enough. I guess I got out of the right side of the bed. You're too pleasant....& I love being miserable. That makes me happy. But I don’t like being happy, so that makes me miserable. I'm a mess. I'm a complex Grouch.