In what we now know as the 6th century, in Rome there was a monk named Dionysius. In what we now call the year 525 pope Johannes I asked him to propose a calculatioin for the dates of Easter. At the time, a Roman era was the most common. However, Dionysius didn't like the person that era was based on (a Byzantine emperor who opposed christianity) and therefore based his tables on a new era, starting with what he thought was the year Jesus Christ was born (Anno Domini, or A.D. for short). He thus started his tables with the year 532.
The new era wasn't popular at first. The first chronicler to use Dionysius' era, around 730 A.D., was the Anglo-Saxon monk Bede, in his "Ecclesiastic History of the English People". He used this era to fix the problem he had because there were seven different English regnal eras.
The use of the A.D. dating got popularised because it was the system used by Charlemagne and his successors. The fact that the Frankish court used this era made the usage spread to German speaking countries.
Alternatively, A.D. (Anno Domini) is sometimes also called C.E. (Commen/Christian Era). Very few people use the code G.C. (Gregorian Calendar), although this is actually correct: I don't mean to be profane, but the year 1 (at Dionysus' time the digit 0 didn't exist in Western Europe) ain't the year Jesus Christ was born. Most scientists now believe Jesus of Nazareth was born in 5 or 6 B.C. and certainly not around Christmas, but somewhere in March. It might be that this "mistake" is made because at Jesus' time the end of the year was in March, while it's now in December.
