Internet Explorer is derived from Spyglass Mosaic. Originally, Spyglass licensed the technology and trademarks from NCSA for producing their own web browser but never used any of the NCSA Mosaic source code [1]. In 1995 Spyglass Mosaic was licensed by Microsoft, in an arrangement under which Spyglass would receive a quarterly fee plus a percentage of Microsoft's revenues for the software.

The browser was then modified and renamed as Internet Explorer. Microsoft originally released Internet Explorer 1.0 in August 1995 with the Internet Jumpstart Kit in Microsoft Plus! for Windows 95. Version 1.5 was released later for Windows NT that supported basic table rendering. Version 2.0 was released for both Windows 95 and Windows NT in November 1995, featuring support for SSL, cookies, VRML, and Internet newsgroups. Version 2.0 was also released for the Macintosh and Windows 3.1 in April 1996.

Internet Explorer 3.0 was released free of charge in August 1996 by bundling it with Windows 95 OSR2. Microsoft thus made no direct revenues on IE and was liable to pay Spyglass only the minimum quarterly fee. In 1997, Spyglass threatened Microsoft with a contractual audit, in response to which Microsoft settled for US $8 million [2]. Version 3 included Internet Mail and News 1.0 and the Windows Address Book. It also brought the browser much closer to the bar that had been set by Netscape, including the support of Netscape's plugins technology (NPAPI), ActiveX, and a reverse-engineered version of JavaScript named JScript. Later, Microsoft NetMeeting and Windows Media Player were integrated into the product and thus helper applications became not as necessary as they once were. Cascading Style Sheets (CSS) were also introduced with version 3 of Internet Explorer.