While it is readily apparent that the terms Mordor and murder are closely related, Tolkien did not simply draw from the latter to create the name. A devoted student of linguistics, he instead chose the Old English word for "mortal crime," which has evolved into our modern English word "murder." In the Elvish language of Sindarin, "Mordor" means Dark Land or Black Country. It is this relation between ancient languages and Tolkien's created tongues that adds to the depth of his work.
Mordor is located east of the Lower Anduin River. It is guarded on the north, south, and west sides by the mountain range Ephel Duath, which forms a rough square with one side missing, providing a convenient fortress for the Forces of Evil. Sauron, the dark servant of Melkor, first settled there at about SA 1000, and it was from Mordor that Sauron directed his wars against The Free Peoples of Middle Earth (elves, dwarves, men and hobbits). After the war with the elves, Sauron remained there until he submitted to Ar-Pharazôn in SA 3262. After the fall of Númenor, Sauron returned once again to Mordor until, in SA 3429, he attacked Gondor. Mordor was finally invaded in SA 3434 by the army of The Last Alliance, an army of elves and men, led by Gil-Galad and Elendil. At the end of The War of The Last Alliance in SA 3441, Sauron was finally overthrown and Mordor was cleansed of evil.
The realm of Gondor built several towers and fortresses to prevent evil from re-entering Mordor, including the tower of Cirith Ungol and Durthang. In TA 1636, these fortresses were abandoned due to the Great Plague which swept the realms of men, and it was then that the Nazgûl entered Mordor unseen and began to prepare the dark forces of evil. Sauron later returned to Mordor and began the rebuilding of the Barad-dûr.
Later, during the War of the Ring, the forces that had been gathered were unleashed against the forces of good. Gondor took the brunt of the force, though the elves, the Dúnedain, Rohan, the Ents, the Dwarves and the Hobbits all played their parts. It was with the destruction of the One Ring that Sauron was finally defeated, and his forces destroyed or scattered. Mordor was devastated by earthquakes.
Source:
Lane, Anthony. "The Hobbit Habit." The New Yorker. 10 Dec. 2001: 103.
This writeup incorporates a Mar 28 2002 writeup by Waywatcher. The integration of these writeups was suggested by Devon.