Long before the events of the novel, the Dark Lord Sauron forges the One Ring to rule the other Rings of Power and corrupt those who wear them: the leaders of Men, Elves and Dwarves. He is vanquished in battle by an alliance of Elves and Men. Isildur cuts the One Ring from Sauron's finger, claiming it as an heirloom for his line, and Sauron loses his physical form. When Isildur is later ambushed and killed by Orcs, the Ring is lost in the River Anduin at Gladden Fields.
Over two thousand years later, the Ring is found by one of the river-folk called Déagol. His friend Sméagol immediately falls under the Ring's influence and strangles Déagol to acquire it. Sméagol is banished and hides under the Misty Mountains, where the Ring extends his lifespan and transforms him over the course of hundreds of years into a twisted, corrupted creature called Gollum.
He loses the Ring, his "precious", and, as recounted in The Hobbit, Bilbo Baggins finds it. Meanwhile, Sauron re-assumes physical form and takes back his old realm of Mordor. Gollum sets out in search of the Ring, but is captured by Sauron, who learns from him that "Baggins" in the Shire now has it. Gollum is set loose, and Sauron, who needs the Ring to regain his full power, sends forth his powerful servants, the Nazgûl, to seize it.