Without a doubt, the Luger semiautomatic pistol is one of the most famous firearms of the 20th century. It's distinctive toggle lock and sleek lines make it very recognizable, as do the fact that it was a standard sidearm of the German, Swiss, and other armies for a period spanning nearly a half century, and produced in large quantities. It is well-known even to many people who know or care nothing about historic firearms.
The Luger has always been known for it's accuracy. Factors contributing to this include tight manufacturing tolerances, excellent grip angle and shape, good trigger pull, and the fact that the barrel stays in a fixed position relative to the rest of the pistol except in the front-back dimension (no tipping as in Browning-style designs).
Georg Luger, an employee of Loewe & Co., took the Borchardt pistol as a starting point for designing the first pistols resembling what we would call a "Luger." The changes he made included development of a new cartridge, the 7.65 Parabellum or 7.65x23 cartridge (also called .30 Luger in USA), which is a 2mm shorter version of the Borchardt cartridge with a different powder charge. (The 7.63 Mauser has a 25mm case). In addition to the new cartridge, Luger also redesigned the complex mechanism behind the grip. He retained the toggle-locking action of the Borchardt, but replaced the Borchardt's bizarre mainspring and the large housing it necessitated with a leaf spring in the grip, improving the balance of the pistol. He also angled the grip for better pointability. A grip safety was added to the rear of the frame by 1904.
After making the changes described above, Loewe vigourously sought military contracts for production of the pistol. The first major success came in Switzerland, which adopted the Luger as its service pistol in 1900, in the 7.65 caliber. Switzerland produced Lugers for army use at an arms factory in Bern. Swiss pistols can be identified by the Swiss federal cross above the chamber. A number of other countries evaluated the Luger, including the USA, for which Loewe & Co. manufactured a number of Lugers in caliber .45ACP. The Luger was defeated in trials by the Colt-Browning that became the model 1911. Lugers were also sold commercially in this period, but the Luger was never a big seller due to it's high cost.
In an attempt to allay concerns about poor stopping power with such a small-caliber bullet, Georg Luger developed a second cartridge, the 9mm Parabellum. The 9mm Parabellum also goes by the names 9mm Luger and 9x19mm, and is distinct from a number of other cartridges that use the designation "9mm" in their names (such as 9mm short, 9mm Makarov, 9mm largo). The 9mm Parabellum cartridge cartridge case has the same base dimensions as the 7.65x23 Parabellum cartridge, but is not necked down, and is shorter, only 19mm long. A number of design changes to the Luger were made in the early 1900's, including replacing the leaf mainspring with a coil spring, and deleting the grip safety. Some pistols were produced with a lug to attach a shoulder stock. The so-called "new model" Luger of 1904 in caliber 9mm Parabellum was accepted by the German navy and later the army and designated the P08. Thereafter, German military sales accounted for the vast majority of Lugers ever produced.