BioShock is set in 1960 in the underwater city of Rapture; the city's history is mostly revealed via audio recordings the player can collect during the game. Rapture was planned and constructed in the 1940s by Objectivist business magnate Andrew Ryan who wanted to create a utopia for society's elite to flourish outside of government control. Scientific progress greatly expanded, including the discovery of the genetic material "ADAM" created by sea slugs on the ocean floor. ADAM allows its users to alter their DNA to grant them super-human powers like telekinesis and pyrokinesis. To protect Rapture, Ryan imposed a law that no contact with the surface world was allowed.
Despite the apparent utopia, class distinctions grew, and former gangster and businessman Frank Fontaine used his influence of the lower class to plan a coup over Rapture. Fontaine profited by creating black market routes with the surface world, and together with Dr. Brigid Tenenbaum, created a cheap plasmid industry by mass-producing ADAM through the implantation of the slugs in the stomachs of orphaned girls, nicknamed "Little Sisters". Fontaine used his plasmid-enhanced army to attack Ryan, but reportedly was killed in the battle. Ryan took the opportunity to seize his assets including the plasmid factories. In the months that followed, a second figure named Atlas rose to speak for the lower class, creating further strife. Atlas led attacks on the factories housing the Little Sisters, and Ryan countered by creating "Big Daddies", plasmid-enhanced humans surgically grafted into giant lumbering diving suits who were psychologically compelled to protect the Little Sisters at all costs. Ryan also created his own army of plasmid-enhanced soldiers, named "Splicers", which he controlled using pheromones distributed through Rapture's air system.
Tension came to a head on New Year's Eve of 1958, when Atlas ordered an all-out attack on Ryan. The battle left many dead, and the few sane survivors barricaded themselves away. What once was a beautiful utopia had fallen into a crumbling dystopia.