Audacity was started in the fall of 1999 by Dominic Mazzoni while he was a graduate student at Carnegie Mellon University in Pittsburgh, PA, USA. He was working on a research project with his advisor, Professor Roger Dannenberg, and they needed a tool that would let them visualize audio analysis algorithms.
Over time, this program developed into a general audio editor, and other people started helping out.
Today, Audacity is developed using Sourceforge, an online site that allows people around the world to collaborate on free software projects.
See http://www.sourceforge.net for more information. Dozens of people have contributed to Audacity, and progress is continually accelerating.