Comrade Mike sent us this 'Tube link to a 1998 live demo of the second iteration of the Prey project, a game which had originally been announced by 3D Realms back in 1995. It was (probably) the first game to demonstrate working portal technology, as you'll see three minutes into this clip.
Prey's fate, of course, was to be abandoned on several occasions, and much of the technology developed through the Nineties was ultimately scrapped. It was finally released in June 2006 after being remade in the Doom 3 engine by Human Head. The portal-use and general physics-twisting Escher-inclinations survived to the released version - and pretty much saved what was otherwise a fairly generic shooter. In fact I would go as far as to argue that reviewers of Prey didn't quite make enough of its excellent reality-bending ideas. Although none of them were quite of the level of Portal's own player-empowered puzzling, they did create some incredible moments in gaming: I'm thinking particularly of the size-change scene. (And I think those folks who've played Prey will know what I mean.) The overall game might not have impressed us all that much, but the more games we play that add to the reality-warping palette of gaming, the better, says I. We want more of This Sort Of Thing.