PHP has come a long way in the last few years. Growing to be one of the most prominent languages powering the Web was not an easy task. Those of you interested in briefly seeing how PHP grew out to what it is today, read on. Old PHP releases can be found at the » PHP Museum. 

PHP/FI

(Personal Home Page / Forms Interpreter).
PHP succeeds an older product, named PHP/FI. PHP/FI was created by Rasmus Lerdorf in 1995, initially as a simple set of Perl scripts for tracking accesses to his online resume. He named this set of scripts 'Personal Home Page Tools'. As more functionality was required, Rasmus wrote a much larger C implementation, which was able to communicate with databases, and enabled users to develop simple dynamic Web applications.

PHP/FI 2.0 was officially released only in November 1997, the second write-up of the C implementation. It was shortly afterwards succeeded by the first alphas of PHP 3.0.

PHP3

PHP 3.0 as creatwed by Andi Gutmans and Zeev Suraski in 1997 as a complete rewrite, after they found PHP/FI 2.0 severely underpowered for developing an eCommerce application they were working on for a University project. Andi, Rasmus and Zeev decided to cooperate and announce PHP 3.0 as the official successor of PHP/FI 2.0, and development of PHP/FI 2.0 was mostly halted.

One of the biggest strengths of PHP 3.0 was its strong extensibility features. In addition to providing end users with a solid infrastructure for lots of different databases, protocols and APIs, PHP 3.0's extensibility features attracted dozens of developers to join in and submit new extension modules. Arguably, this was the key to PHP 3.0's tremendous success. Other key features introduced in PHP 3.0 were the object oriented syntax support and the much more powerful and consistent language syntax.

The whole 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 named plain 'PHP', with the meaning being a recursive acronym - PHP: Hypertext Preprocessor.

PHP 3.0 was officially released in June 1998, after having spent about 9 months in public testing.

PHP 4

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, PHP 3.0. 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

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 such as improved support for object-oriented programming.

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References:
 http://www.php.net/history