PHP was conceived sometime in the fall of 1994 by Rasmus Lerdorf. Early non-released versions were used on his home page to keep track of who was looking at his online resume. The first version used by others was available sometime in early 1995 and was known as the Personal Home Page Tools. It consisted of a very simplistic parser engine that only understood a few special macros and a number of utilities that were in common use on home pages back then. A guestbook, a counter and some other stuff. The parser was rewritten in mid-1995 and named PHP/FI Version 2. The FI came from another package Rasmus had written which interpreted html form data. He combined the Personal Home Page tools scripts with the Form Interpreter and added mSQL support and PHP/FI was born. PHP/FI grew at an amazing pace and people started contributing code to it.
It is difficult to give any hard statistics, but it is estimated that by late 1996 PHP/FI was in use on at least 15,000 web sites around the world. By mid-1997 this number had grown to over 50,000. Mid-1997 also saw a change in the development of PHP. It changed from being Rasmus' own pet project that a handful of people had contributed to, to being a much more organized team effort. The parser was rewritten from scratch by Zeev Suraski and Andi Gutmans and this new parser formed the basis for PHP Version 3. A lot of the utility code from PHP/FI was ported over to PHP3 and a lot of it was completely rewritten.
Today (mid-1999) either PHP/FI or PHP3 ships with a number of commercial products such as C2's StrongHold web server and RedHat Linux. A conservative estimate based on an extrapolation from numbers provided by NetCraft would be that PHP is in use on over 150,000 sites around the world. To put that in perspective, that is more sites than run Netscape's flagship Enterprise server on the Internet.
Also as of this writing, work is underway on the next generation of PHP, which will utilize the powerful Zend scripting engine to deliver higher performance, and will also support running under webservers other than Apache as a native server module.