Originally, Sauron was a powerful Maia in the service of Aule the smith; however early in the Silmarillion, he is subverted by Morgoth, and turned to evil. For the whole of the Silmarillion, Sauron stays with Morgoth as a loyal assistant.
Following the War of the Wraith at the end of First Age, Sauron was brought by the victorious host to Valinor as a prisonner, and begs there for mercy from the Valar. He was given freedom and allowed to return to Middle Earth. For more than a millennium and a half, Sauron's conduct was perfect. He not only refrained from evil, but he even gave gifts to the Elves of Middle Earth, thus earning their favor. At the end of that time, Sauron and the Elves forged the [Rings of Power]?. However as soon as this was done, the Elves discovered that Sauron's One Ring was not an instrument of peace, but rather a means to enslave all the peaceful peoples of Middle Earth. However, the Elves managed to protect their three rings from Sauron's influence, and Sauron set out to conquer them physically.
A war insued, in which the Elves suffered grave losses. Eventually they received help from Numenor and were saved; however Sauron stayed as the lord of his kingdom of Mordor. Centuries later, arrogant Numenorian rulers grew so much in power that they were able to capture Sauron physically. However when Sauron was brought to Numenor, he corrupted that land and induced its destruction (as is described in Akallabeth). Sauron hismelf had lost the fair shape he bore beforehands, but his spirit survived and he returned to Middle Earth.
Once more he tried to use the ring to enslave Middle Earth, which was now defenseless. However he was repelled by the survivors from Numenor. Then, the Last Alliance of Elves and Men returned war and captured Mordor. Sauron's body was destroyed and the Ring was cut off his finger.
The Third Age of Middle Earth that followed was one of hardship, both of elves (who were at the dusk of their civilization there), and of Men (whose power and knowledge diminished as the Numenorian culture was forgotten). Not the least role in this was played by creatures of Evil who seemed to come from the East. When, during the events described in The Hobbit, the Evil was pushed out of Mirkwood, it turned out that it was really Sauron all along. Immediately afterwards, he returned to Mordor and rebuilt his fortress of Barad-Dur. In order to enslave the peoples of Middle Earth, he decided to find the One Ring and use it for yet a third time.
Sauron bred immense armies of Orcs and Humans. The most prominent of the latters were the [Nine Ringwraiths]?, to whom he gave the 9 rings he intended for Men. Due to the loss of his fair shape, he is seen by noone during the plot of the book; however he is omnipresent because of his never-closing [Evil Eye]?.
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