THE HIJRA CALENDAR
The Islamic calendar is reckoned from the time of migration (Hijra) of Prophet Mohammad (Peace Be upon Him) from Mecca to Madina. The Prophet's decision to migrate from Mecca came after several years of inhuman treatment of the faithful by the powerful tribes who were united despite all their feuds to stop the spread of Islam.
Prophet Mohammad's decision to leave Mecca coincided with the infidel's plan to assassinate him. In 622 AD, the Quraysh tribesmen held a meeting and decided that a band of young men, one from each tribe, should assassinate Prophet Mohammad collectively so that their responsibility for the murder could not be placed on any particular tribe.
On the eventful night, the Prophet asked his cousin Ali ibn Abutalib to take his place in bed to make the Meccans think that he was asleep. The Prophet himself slipped out unobserved along with Abu Bakr. They secretly made their way to a cave named Thawr, not far from Mecca and lay in hiding there for a day or two until Abu Bakr's son reported that the search for him had been given up. Then the two set out from Madina on camel back. They reached Quba, on the edge of the Madina oasis, on 12th Rabi' al -Awwal. With Mohammad's arrival in Quba a new phase of his career and glory of Islam started.
This migration has a special significance in the history of Islam. It ended the Meccan period of humiliation and torture and began the era of success. His own people to whom he preached Islam for 13 years neglected the Prophet of Islam. But he was cordially received in Madina as an honored chief.
In Madina his power enhanced day by day. Here he was not only the religious leader but took the role of a politician and statesman too. Prophet Mohammad expired ten years after his migration to Madina but only in one decade he changed the course of human history.
In view of this special significance of the Prophet's migration
Ali (who later became the fourth caliph) suggested the Hijra as the beginning of the Islamic year with Moharram as its first month. Consequently, Caliph Omar in 21 A.H. or 641 A.D introduced the Islamic calendar in its present form.
Taken from: http://www.ghazali.net/calander/Hijra/body_hijra.html