The prize was won on October 4, 2004, the 47th anniversary of the Sputnik 1 launch, by the Tier One project designed by Burt Rutan and financed by Microsoft co-founder Paul Allen, using the experimental spaceplane SpaceShipOne.

The competition goal was adopted from the SpaceCub project, demonstration of a private vehicle capable of flying a pilot to the edge of space, defined as 100 km altitude.

NASA is developing a similar prize program called Centennial Challenges to generate innovative solutions to space technology problems.

Twenty-six teams from around the world participated, ranging from volunteer hobbyists to large corporate-backed operations:[4] Some sources mention two other companies: but do not mention Whalen Aeronautics Inc.[5] The Tier One project made two successful competitive flights: X1 on September 29, 2004, piloted by Mike Melvill to 102.9 km; and X2 on October 4, 2004, piloted by Brian Binnie to 112 km.

The Foundation has developed into a non-profit prize institute that conceives, designs and manages public competitions for the benefit of humanity.

[10][11] It was "fully funded through January 1, 2005, through private donations and backed by an insurance policy to guarantee that the $10 million is in place on the day that the prize is won.

An independent spin-off called the N-Prize was started by Cambridge Microbiologist Paul H. Dear in 2007, designed to foster research into low-cost orbital launchers.