TimeLords begins at the End of Time. A doomed race, known as The Designers, gifted in both psionics and sciences set about escaping their fate as the inevitable end of the universe encroached. Eventually, they discover time travel, and use this knowledge to move their entire solar system backwards in time to when the universe is about 15 billion years old. The actual Designers have never been seen by humans. After attempting to create powerful new life forms, they created Lucifer, a sentient being that led the destruction of the Designer race and caused the dispersion of Designer technology across the universe.
The pinnacle of their achievements was the Matrix, a small time-travel device, the size and shape of a 20 sided die, weiging about 3 pounds. The Matrix could be used for personal time travel, as an energy source, and other things only hinted at by the rule books. It is one of these Matrix devices that the PC of the game find to begin their adventure.
From wikipedia's entry on TimeLords