Saying ‘God bless you’ after a person sneezes goes back to ancient times. Back then, it was said because people believed that the soul left the body when a person sneezed and that evil spirits could enter. A blessing in the name of God was supposed to prevent this.
In the Dark Ages, it was believed that a person’s heart stopped momentarily when someone sneezed. So a person was, in effect, dead for an instant and had to be blessed.
Source: The Book of Totally Useless Information