The program currently known as Hammer actually has a long, long history in the video game industry, stretching all the way back to the period of the first Quake game. At the time, it was actually known as The Forge, before it soon changed names to Worldcraft. It was created by Ben Morris, who worked on the Quake games and used it to design the levels. From there, it eventually ended up under Valve and progressed into the form we know.
1996
The Forge Beta was created by Ben Morris.
It was renamed to Worldcraft, it was sold in its full version for $34.95 later that year.
1997
Valve hires Ben Morris and acquires Worldcraft for use in Half Life.
1998
Ben Morris leaves Valve, and Worldcraft gains Quake II support.
1999
In true Valve fashion, a free Worldcraft version is released, but only for use with Half Life.
2002
Worldcraft proceeds to advance, with new GSL rendering options. It is now renamed to the Hammer Editor.
2003
The Hammer tool now has compatibility with Valve’s Goldsrc Engine.
2004
Hammer is the official mapping tool for the Source Engine, and is released with the SDK. Half Life 2 is released.
2006
Hammer is last updated by Valve.
2009
Left 4 Dead 2 is released, and a more advanced version of the Source SDK is required to modify and create for the game, known as the Left 4 Dead 2 Authoring Tools.
Various Authors (2010). Valve Developer Comnunity Retrieved from
http://developer.valvesoftware.com/wiki/Hammer_Editor_version_history.