Georg Luger developed this pistol while working for the Loewe company of Berlin, now renamed Deutsche Waffen und Munition Fabrik (DWM). It has the distinction of being one of the best known pistols in the world. Luger's design was based on Hugo Borchardt's Self Loading Pistol, but Luger re-designed the Borchardt locking system into a much smaller package.
Although Borchardt thought his design was quite adequate, the Borchardt Self Loading Pistol was bulky and very expensive to produce. Between 1895 and 1897, Luger modified the Borchardt, producing a small number of prototype weapons chambered in 7.65 mm Parabellum. While the Luger retained the 
toggle lock design, it did away with the cumbersome attachment at the rear of the receiver, moving the locking assembly over the grip. The grip itself had a new shape and a vastly improved angle, improving handling.
The first country to adopt the Luger was Switzerland. They adopted the model 1900 Luger, chambered in 7.65 mm Luger-Parabellum round. In 1902 the DWM, along with Luger, by request of German Navy developed new round, 9x19 mm Luger-Parabellum, now one of the most common pistol cartridges of the world, by re-necking the case of the 7.65 mm Luger round. The Luger model 1904, in 9 mm, was adopted by German Navy, with the German Army (Reichswehr) following in 1908, who gave the pistol the official designation Parabellum Model 08, or P-08. The name Parabellum comes from an ancient Latin saying 'Si vis Pacem, Para bellum' - if you want Peace, prepare for War. In 1938 the German Army adopted the Walther P-38, but Lugers were in production until 1943.
During WW II, many companies, such as Mauser, Werke and others, also produced Lugers. Since then, the Lugers were adopted by many countries and remained in service through the 1950's. There are at least thirty five different variations of the Luger in existence, including numerous variations of the basic P-08.