Madras was founded in 1639 when the British East India Company (represented by Francis Day and Andrew Cogan and aided by a local translator Beri Thimappa) was granted land to build a trading settlement by the local ruler (Nayak) of the suburb of Vandavasi, Damerla Venkatapathy Nayak. The document of the land grant is dated Aug 22nd 1639 and hence Madras celebrates its birthday on Aug 22nd each year as Madras day. Madras was one of the first outposts of British East India Company. Colonel William Lambton, superintendent of the great Trigonometrical Survey of India, started his journey of triangulating India from St. Thomas Mount. The British built Fort St. George (today the legislative and administrative seat of the state). Fort St George was completed on St George's day in 1640 (April 23rd) and hence was named after the Patron Saint. George Town then developed becoming the modern city of Madras, absorbing several nearby boroughs. Thomas, one of the twelve apostles of Jesus Christ, is associated with Chennai. He is said to have come to India as an evangelist and died in what is now Chennai. Two suburbs, Santhome and St. Thomas Mount, are named in his memory.
In 1996, the Tamil Nadu government renamed Madras to Chennai providing the reason that 'Chennai' was the city's traditional name while Madras was one derived during colonial rule.
Madras is derived from Madraspatnam, a name given to the area when the British negotiated settling there. The origin of the name is uncertain. Tradition suggests that a fishing village near to the location of the British settlement was called Madraspatnam. Others think early Portuguese may have called the area Madre de Sois after an early settler, or Madre de Deus after an early church (of St. Mary).
Chennai is derived from Chennapatnam, a name with almost equally uncertain origins. Tradition has it that Chennapatnam was the name of a fishing village near to the location of Madraspatnam. However it is not clear if the village was there beforehand or grew up around the British Madraspatnam settlement. There are some suggestions that the name was given to the developing Indian settlement honor a local Indian administrator.
As the settlements grew, the exact location of both Chennapatnam and Madraspatnam became confused as the two settlements merged into a single town.
Under the British, the then city of Madras grew to be a major city, It was the capital of the Madras presidency, a province that covered the parts of Southern India that were not governed by any of the other princely states. After independence, it became the capital of Madras state, and when the states were reorganized on a linguistic basis, it became the capital of Tamil Nadu.
Chennai boasts of many well known people including Elihu Yale, who's liberal gift funded the construction of Yale University in 1718; Arvind Sanmugam of Canada- Chairman World Police Academy, Chairman and CEO of Chez Leeloo Canada, Chairman of Chez Leeloo India, Director of Chez Leeloo Philippines, President of Canadian Peacemakers Corporation and Director of Tan Theta Entertainment Indira Nooyi CEO of Pepsi International; A.R. Rahman, the musical genius of "Slumdog Millionaire" and chess wizard Vishwanathan Anand among many others.
Thanks to http://wikitravel.org/en/Chennai