In the beginnings of Ea there was the war between the Valar and Melkor. Melkor, being the greatest of all the original Ainur, used his powers to bend the earth against the Valar and against their wills. Time and time again he struck, and although the Valar could stop him, they could not repair the land back to how it once was. And so the land was distorted from its original form.
Now Melkor, always planning evil, had grown tired of his pointless fight against the Valar, and allowed them to defeat him, for a time. This gave him time to plan for the future, for all he wanted was power and control, and the power of the Flame Imperishable to create his own creatures and servants. However, knowing that the Flame belonged to Eru Illúvatar only, he was forced to use his power to distort, and so distorted the Maiar that he had corrupted to take the shapes of his demons. Soon he had a legion of Balrogs and demons, and he was well pleased. However, Melkor wanted something more, something to rival those damned eagles that could strinke his forces and fly away without harm. He wanted a beast to dominate the skies, and to help his demons to dominate the lands of Ea. And so he conceived the thought of the first dragon. Searching through his servants, he found one of his most loyal Maiar and told him "I shall create a creature, one of which has never been seen, to fight the eagles in rivalry for the skies, and to instill fear into the people who are yet to come. You I have chosen to be the father of these creatures, the first and the strongest."
And so Melkor brought this spirit to a mountain, and in the mountain, transformed him. Blessing him with his dark powers, he created an egg, one of a beast never before seen. It was that of a dragon. And he said "You I shall call Glaurung, and you will be the beginnings of a terror on this world. You shall instill fear with your eyes. Mountaintops will be your home, and the skies will be yours. No creature will be able to stop your terror, and with your kind in my legions, my victory will be complete, and this world will be mine."
And so was created the first of the dragons, the feared Glaurung, only an egg now, dormant, waiting for his chance to kill, control, and serve his master.