The Unreal engine was developed by Epic Games in 1998 and represented the main rival of the Quake-engine. With it's core written in C++ it featured a high degree of portability.
It's still used today, you might heard of MASS EFFECT and BIOSHOCK, they are actually made using the Unreal engine.
Unreal Engine 1 made it's debut with the games Unreal and it's multyplayer "counterpart" Unreal Tournament. Altough it didn't use many resources and could run on average computers at the time, it featured incredible graphics and fast paced-action. It contained a scripting language that made it easy to mod and also featured an client-servered architecture for the first time in gaming.
Unreal engine 2 had it's core code completely rewritten and integrated the new UnrealED 3(the level editor).
Games made using this engine were America's Army, Unreal Tournament 2003 and many more.
Unreal engine 3 was made for the current generation console and DirectX 9/11. It included HDRR, per-pixel lighting and dynamic shadows. Games made using this engine were Gears of war 1 2 and 3, Unreal Tournament 3, Blacklight Tango Down, Bulletstorm, Borderlands, Mass Effect and many many many more.
It was also presented a non-gaming use. non-gaming projects including construction simulation and design, driving simulation, virtual reality shopping malls and film storyboards. It also powers the animation software "Muvizu 3D" which is currently in beta stage.
This videos add more details to what i said above, if you are interested you should see them.
Unreal Engine 1/2
Unreal Engine 3