Drupal was started in 2000 by Dries Buytaert when he was a student at the University of Antwerp. Dries, along with some friends at the university, wanted a way to communicate about the various details of their lives. To meet that need, Dries wrote a web-based application that allowed people to share notes. In January 2001, Dries decided to release the source code, and the Drupal project was born.

The Drupal handbook provides a more detailed overview: http://drupal.org/node/769