I would like to quote some info from a web i found..
"The Islamic Calendar, which is based purely on lunar cycles, was first introduced in 638 C.E. by the close companion of the Prophet (PBUH) and the second Caliph, `Umar ibn Al-KHaTTab (592-644 C.E.) RAA. He did it in an attempt to rationalize the various, at times conflicting, dating systems used during his time. `Umar consulted with his advisors on the starting date of the new Muslim chronology. It was finally agreed that the most appropriate reference point for the Islamic calendar was the Hijrah. The actual starting date for the Calendar was chosen (on the basis of purely lunar years, counting backwards) to be the first day of the first month (1 MuHarram) of the year of the Hijrah. The Islamic (Hijri) calendar (with dates that fall within the Muslim Era) is usually abbreviated A.H. in Western languages from the latinized Anno Hegirae, "in the year of the Hegira". MuHarram 1, 1 A.H. corresponds to July 16, 622 C.E.
The Hijrah, which chronicles the migration of the Prophet Muhammad (PBUH) from Makkah to Madinah in September 622 C.E., is the central historical event of early Islam. It led to the foundation of the first Muslim city-state, a turning point in Islamic and world history.
To Muslims, the Hijri calendar is not just a sentimental system of time reckoning and dating important religious events, e.g., Siyaam (fasting) and Hajj (pilgrimage to Makkah). It has a much deeper religious and historical significance."