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Linux's History begins with Bell Labs. Linux is based on Bell Lab's UNIX operating system which arguably the most stable operating system ever created. Three main people caused Linux to exist and inspired its creation.
The first of these people is Andrew S. Tanenbaum. Tanenbaum was a Dutch college computer science professor. He wanted to teach his students about the inner workings of a computer but could not do what he wanted with the operating systems available at the time. To remedy this Tanenbaum wrote his own operating system based on UNIX using C and assembly. He called this operating system MINIX. MINIX was not a very stable or efficient operating system but there was something unique about it, the source code wad made available. Tanenbaum released the source code in his book entitled Operating Systems. His book became a huge success with computer science students, professors, and hackers alike who studied his operating system to learn how it worked.
The next person who contributed to Linux didn't do so directly, but he made perhaps the most significant contribution. This person is Richard Stallman. Stallman is the creator of the GNU project and the GNU license, which state that software should be open source and free to download, use, modify, and redistribute. Without the GNU license Linux would not be the free, open source operating system it is today and it would not have spawned the immense community and following that exists for it today. He also created the GNU C Compiler (GCC) which is still the most widely used compiler by Linux programmers today.
The final contributor to Linux is the father of Linux, Linux Travolds. Travolds was a 21 year old student attending the University of Helsinki. Travolds wanted an operating system that would do what he wanted but did not like MINIX because it was created for study not for serious use. He examined MINIX's source code and used it and UNIX to create his own operating system called Linux. In September 1991, Travolds released Linux version 0.01, with releases 0.02 and 0.03 soon to follow. These releases contained very little software and practically no hardware support. Subsequent releases greatly improved the operating system and added much better hardware support and additional software. The most significant decision Travolds made regarding Linux was to put it under the GNU license, making it free and open source.
The rest of Linux's History can not be linked to any one person. Linus Travolds continued to oversee Linux for a while, the actual developing and programming was done by hundreds of thousands of GNU programmers from around the world. They enhanced Linux and created new and more powerful software for it, all under the GNU License. At some point in this groups of Linux programmers began to create their own versions of Linux called distributions or distros for short. These distros include Red Hat, Mandrake, and Debian. This is where modern Linux is. It is still being developed buy thousands of GNU programmers and new distros are provided almost daily.
Sources (external):
http://ragib.hypermart.net/linux/
http://www2.educ.umu.se/~bjorn/linux/misc/linux-history.html