Haydn was inspired to write a large oratorio during his visits to England in 1791-2 and 1794-5, when he heard oratorios of Handel performed by large forces. It is likely that Haydn wanted to try to achieve results of comparable weight, using the musical language of the mature classical style.
The text of The Creation has a long history. The fleshed-out version of the Genesis tale used is that of John Milton's Paradise Lost. This material was made into an oratorio libretto by one Lidley (possibly Linley). Lidley may have intended the libretto for the use of Handel; however, Handel never set it to music. Haydn's host in England, Johann Peter Salomon, somehow obtained a copy of Lidley's libretto and gave it to Haydn. When Haydn returned to Vienna, he gave it to his friend and sponsor Baron Gottfried van Swieten, who produced a German version as well as a metrically-matched English retranslation. The work was published bilingually and is still performed in both languages today.
Haydn found his topic to be inspirational, and from his own testimony it appears that the composition of The Creation was for him a profoundly religious experience. He worked on the project to the point of exhaustion, and indeed collapsed into a period of illness after he had finally conducted the premiere performance.
The Creation is set for chorus, orchestra, and three vocal soloists (soprano, tenor, and bass). The soloists represent angels who narrate and comment on the successive six days of creation; later two of the soloists take the roles of Adam and Eve. The choral singers are employed in a series of monumental choruses, several of them celebrating the end of one particular day of creation. The orchestra often plays alone, notably in the episodes of "tone-painting": the appearance of the sun, the creation of various beasts, and above all in the overture, the famous depiction of the Chaos before the creation.
The Creation was premiered with huge success in 1798, first before an audience of aristocrats in Vienna, followed by performances for the general public in Vienna and London. It has been a popular work in the classical repertory since that time.
Link: http://www.bbc.co.uk/radio3/classical/archive/creation.shtml. Detailed commentary by David Wyn Jones, with complete texts in English and German.