The core principle of Tor, "onion routing", was developed in the mid-1990s by United States Naval Research Laboratory
employees, mathematician Paul Syverson and computer scientists Michael G. Reed and David Goldschlag, with the purpose of protecting U.S. intelligence communications online. Onion routing was further developed by DARPA
The alpha version of Tor, developed by Syverson and computer scientists Roger Dingledine and Nick Mathewson and then called The Onion Routing project, or TOR project, launched on 20 September 2002. On 13 August 2004, Syverson, Dingledine and Mathewson presented "Tor: The Second-Generation Onion Router" at the 13th USENIX Security Symposium. In 2004, the Naval Research Laboratory released the code for Tor under a free license, and the Electronic Frontier Foundation (EFF) began funding Dingledine and Mathewson to continue its development.
In December 2006, Dingledine, Mathewson and five others founded The Tor Project, a Massachusetts-based 501(c)(3) research-education nonprofit organization responsible for maintaining Tor. The EFF acted as The Tor Project's fiscal sponsor in its early years, and early financial supporters of The Tor Project included the U.S. International Broadcasting Bureau, Internews, Human Rights Watch, the University of Cambridge, Google, and Netherlands-based Stichting NLnet.
From this period onwards, the majority of funding sources came from the U.S. government