PHP as it's known today is actually the successor to a product named PHP/FI. Created in 1994 by Rasmus Lerdorf, the very first incarnation of PHP was a simple set of Common Gateway Interface (CGI) binaries written in the C programming language. Originally used for tracking visits to his online resume, he named the suite of scripts "Personal Home Page Tools," more frequently referenced as "PHP Tools."
Over time, more functionality was desired, and Rasmus rewrote PHP Tools, producing a much larger and richer implementation. This new model was capable of database interaction and more, providing a framework upon which users could develop simple dynamic web applications such as guestbooks.
In June of 1995, Rasmus » released the source code for PHP Tools to the public, which allowed developers to use it as they saw fit. This also permitted - and encouraged - users to provide fixes for bugs in the code, and to generally improve upon it.
In September of that year, Rasmus expanded upon PHP and - for a short time - actually dropped the PHP name. Now referring to the tools as FI (short for "Forms Interpreter"), the new implementation included some of the basic functionality of PHP as we know it today. It had Perl-like variables, automatic interpretation of form variables, and HTML embedded syntax. The syntax itself was similar to that of Perl, albeit much more limited, simple, and somewhat inconsistent. In fact, to embed the code into an HTML file, developers had to use HTML comments. Though this method was not entirely well-received, FI continued to enjoy growth and acceptance as a CGI tool --- but still not quite as a language.
However, this began to change the following month; in October, 1995, Rasmus released a complete rewrite of the code. Bringing back the PHP name, it was now (briefly) named "Personal Home Page Construction Kit," and was the first release to boast what was, at the time, considered an advanced scripting interface. The language was deliberately designed to resemble C in structure, making it an easy adoption for developers familiar with C, Perl, and similar languages. Having been thus far limited to UNIX and POSIX-compliant systems, the potential for a Windows NT implementation was being explored.
The code got another complete makeover, and in April of 1996, combining the names of past releases, Rasmus introduced PHP/FI. This second-generation implementation began to truly evolve PHP from a suite of tools into a programming language in its own right. It included built-in support for DBM, mSQL, and Postgres95 databases, cookies, user-defined function support, and much more. That June, PHP/FI was given a version 2.0 status. An interesting fact about this, however, is that there was only one single full version of PHP 2.0. When it finally graduated from beta status in November, 1997, the underlying parsing engine was already being entirely rewritten.
PHP 3.0 was the first version that closely resembles PHP as it exists today. Finding PHP/FI 2.0 still inefficient and lacking features they needed to power an eCommerce application they were developing for a university project, Andi Gutmans and Zeev Suraski of Tel Aviv, Israel, began yet another complete rewrite of the underlying parser in 1997. Approaching Rasmus online, they discussed various aspects of the current implementation and their redevelopment of PHP. In an effort to improve the engine and start building upon PHP/FI's existing user base, Andi, Rasmus, and Zeev decided to collaborate in the development of a new, independent programming language. This entirely new language was released under a new name, that removed the implication of limited personal use that the PHP/FI 2.0 name held. It was renamed simply 'PHP', with the meaning becoming a recursive acronym - PHP: Hypertext Preprocessor.
One of the biggest strengths of PHP 3.0 was its strong extensibility features. In addition to providing end users with a mature interface for multiple databases, protocols, and APIs, the ease of extending the language itself attracted dozens of developers who submitted a variety of modules. Arguably, this was the key to PHP 3.0's tremendous success. Other key features introduced in PHP 3.0 included object-oriented programming support and a far more powerful and consistent language syntax.
In June, 1998, with many new developers from around the world joining the effort, PHP 3.0 was announced by the new PHP Development Team as the official successor to PHP/FI 2.0. Active development of PHP/FI 2.0, which had all-but ceased as of November of the previous year, was now officially ended. After roughly nine months of open public testing, when the announcement of the official release of PHP 3.0 came, it was already installed on over 70,000 domains around the world, and was no longer limited to POSIX-compliant operating systems. A relatively small share of the domains reporting PHP as installed were hosted on servers running Windows 95, 98, and NT, and Macintosh. At its peak, PHP 3.0 was installed on approximately 10% of the web servers on the Internet.
By the winter of 1998, shortly after PHP 3.0 was officially released, Andi Gutmans and Zeev Suraski had begun working on a rewrite of PHP's core. The design goals were to improve performance of complex applications, and improve the modularity of PHP's code base. Such applications were made possible by PHP 3.0's new features and support for a wide variety of third party databases and APIs, but PHP 3.0 was not designed to handle such complex applications efficiently.
The new engine, dubbed 'Zend Engine' (comprised of their first names, Zeev and Andi), met these design goals successfully, and was first introduced in mid 1999. PHP 4.0, based on this engine, and coupled with a wide range of additional new features, was officially released in May 2000, almost two years after its predecessor. In addition to the highly improved performance of this version, PHP 4.0 included other key features such as support for many more web servers, HTTP sessions, output buffering, more secure ways of handling user input and several new language constructs.
PHP 5 was released in July 2004 after long development and several pre-releases. It is mainly driven by its core, the Zend Engine 2.0 with a new object model and dozens of other new features.
PHP's development team includes dozens of developers, as well as dozens others working on PHP-related and supporting projects, such as PEAR, PECL, and documentation, and an underlying network infrastructure of well over one-hundred individual web servers on six of the seven continents of the world. Though only an estimate based upon statistics from previous years, it is safe to presume PHP is now installed on tens or even perhaps hundreds of millions of domains around the world.
Reference from php.net