Project Xanadu was the first hypertext project, founded in 1960 by Ted Nelson. Administrators of Project Xanadu now contrast it with both paper and the World Wide Web, saying "Today's popular software simulates paper. The World Wide Web (another imitation of paper) trivialises our original hypertext model with one-way ever-breaking links and no management of version or contents." Wired magazine called it the "longest-running vaporware story in the history of the computer industry".

The first attempt at implementation began in 1960, but it wasn't until 1998 that an implementation (albeit incomplete) was released. During his first year as a graduate student at Harvard, Nelson began implementing the system which contained the basic outline of what would become Project Xanadu: a word processor capable of storing multiple versions, and displaying the differences between these versions. Though he did not complete this implementation, a mockup of the system proved sufficient to inspire interest in others.

On top of this basic idea, Nelson wanted to facilitate nonsequential writing, in which the reader could choose his or her own path through an electronic document. He built upon this idea in a paper to the ACM in 1965, calling the new idea "zippered lists". These zippered lists would allow compound documents to be formed from pieces of other documents, a concept named transclusion.

In 1967, while working for Harcourt, Brace he named his project Xanadu, in honour of the poem "Kubla Khan" by Samuel Taylor Coleridge.

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