The GNU Project was launched in 1984 to develop a complete Unix-like operating system which is free software: the GNU system. (GNU is a recursive acronym for “GNU's Not Unix”; it is pronounced “guh-NEW”.) Variants of the GNU operating system, which use the kernel Linux, are now widely used; though these systems are often referred to as “Linux”, they are more accurately called GNU/Linux systems.
For more information, see:
http://www.gnu.org/
http://www.gnu.org/gnu/linux-and-gnu.html