Everything You Wanted To Know About Unreal
TeamXbox has a great five page article, appropriately titled Everything You Wanted to Know About Unreal, exploring the history of the Unreal series, Unreal Engine, and Epic (Mega)Games itself. The feature starts at the very beginning and winds its way up to the present and future.
Research on this engine started in 1994 but it wasn’t until 1998 that their work would materialize in a retail title. In between those four years many things happened; James Schmalz (who came up with the idea of a “Magic Carpet-like environment where you fly through caverns with robots”) left the group to found his own development studio, Digital Extremes; Jay Wilbur, one of the founders of id Software, joined Epic to help Mark Rein on the business side, and Steve Polge was hired to help with A.I. programming.