GNU is a project by the FSF to produce an open source Unix like operating system.the FSF Followed the Unix Philosophy by building the tools that would be neccesary first. The development of the Linux kernel which provided a compatible kernel meant that the aim of the project was complete.
Naming Controversy Edit
Richard Stallman tried to convince he linux community that since the Gnu tools were an essential part of the linux operating system, the whole thing should be called Gnu/Linux. However as it was pointed out many other components also go into the operating system (such as X). So most Linux distributions just stick to to using the name linux.