Green’s Dictionary of Slang

(orig. US) relax! calm down!

1957		Laurents & Sondheim West Side Story I i: Cool, Action boy. The Sharks want a place, too, and they are tough.
1967		P. Thomas Down These Mean Streets (1970) 20: Cool, cool, James, I was only kidding. Hold that water, man; I can catch a cold. Be nice.