The codebase for Microsoft SQL Server originated in Sybase SQL Server, and was Microsoft's entry to the enterprise-level database market, competing against Oracle, IBM, and Sybase. The first version was SQL Server for OS/2 (about 1989) which was essentially the same as Sybase SQL Server 4.0 on Unix, VMS, etc.

About the time Windows NT was coming out, Sybase and Microsoft parted ways and pursued their own design and marketing schemes. Later, Sybase changed the name of its product to Adaptive Server Enterprise to avoid confusion with Microsoft SQL Server. Until 1994 Microsoft's SQL Server carried three Sybase copyright notices as an indication of its origin.

A stripped down version of Microsoft Server known as MSDE (Microsoft SQL Server Desktop Engine) is distributed with products such as Visual FoxPro, Microsoft Access, MS Web Matrix, and other products. MSDE has a limit of 2 GB, 8 connections, and comes with no tools to administor it.

MS SQL Server uses a variety of SQL called T-SQL, or Transact-SQL, a superset of SQL-92 (The ISO standard for SQL, certified in 1992). T-SQL mainly adds additional syntax for use in stored procedures, and affects the syntax of transactions support. (Note that SQL standards require atomic, consistent, isolated, durable transactions.) MS SQL Server and Sybase/ASE both communicate over networks using an application-level protocol called Tabular Data Stream (TDS). The TDS protocol has also been implemented by the FreeTDS project ([1]) in order to allow more kinds of client applications to communicate with MS SQL Server and Sybase databases. MS SQL Server also supports Open Database Connectivity (ODBC).

A computer worm named the SQL slammer worm which exploits a security vulnerability in this system was discovered in January 2003, and caused a large Internet slowdown on January 24.Possibly this worm caused the largest malfunction in Internet functionality since the infamous Morris worm November 2, 1988.