In the lifetime of the Prophet Mohammed, and for some years afterwards, Islam was a united faith. But by the 650s AD, Islam had split into two main sects which fought bitterly with each other. These two sects were called the Shiites (SHE-ites) and the Sunnis (SOO-knees). Both Sunnis and Shiites still exist today and they are still fighting.
The Shiite sect began in the 650s, when 'Ali, the son-in-law of Mohammed, became Caliph. Many Arabs supported another candidate, the Umayyad Mu'awiya, who did become Caliph when 'Ali was murdered in 661 AD. The losing side, the supporters of 'Ali, became known as the Shiites, which means "the supporters of 'Ali."
Because they did not have any political power anymore, these Shiites began to look for religious power. The Shiites also began to gather support from anybody else in the Islamic Empire who felt left out or neglected by the Caliph Mu'awiya and the Sunnis (the group that was in charge). Many of the Mawali, non-Arab people who had converted to Islam, became Shiites, though many Arabs were Shiites as well. Shiism became a kind of revolt agains the Arab upper class (rich people), not against Arabs in general.
The most important religious idea of Shiism was that their religious leader was like the Jewish or Christian Messiah, and was going to come save them from evil. Many candidates were proposed from among the descendants and relatives of 'Ali and Fatima, but at first they all failed to get power.
When the Abbasids got into power in 750 AD, however, they were Shiites, and for the next several hundred years Shiites controlled the Islamic Empire. Even when the Fatimids took over Egypt and North Africa, they were Shiites too.
However, when the Ghaznavids and then the Seljuks and Ayyubids took over from 950 onwards, they were Sunnis, and from that time on the majority and rulers of the Islamic Empire have generally been Sunnis, except in the center of West Asia (modern Iran and Iraq), where Shiites are the majority.
To find out more about Shiites, check out these books from Amazon or from your local library: