Deagol was a hobbit, but a very significant one. He belonged to the people akin to the Stoor branch of hobbits that lived in the bounds of the Brown Lands, over the banks of the Anduin river.
He was the first of his race to come in contact with the One Ring; by virtue of this, he is a significant player in history of Middle-earth. In the year 2463 (Third Age), Deagol found the One Ring by chance while he was fishing in the waters of the Anduin river with his friend Smeagol. Deagol's hands were the first in touch the One Ring since the death of Isildur, the last time the Ring was seen.
Deagol's discovery brought the One Ring back into the world, and started the chain of events that would determine the destiny of Middle-earth. But Smeagol saw Deagol find the ring. Dazzled by the bright of gold, Smeagol demanded the Ring from Deagol as a birthday gift. When Deagol refused to give him the ring, Smeagol killed his friend, hid his body, and took the One Ring.
The murder of Deagol and Smeagol's corrupt behavior, signaled the unwelcome and violent return of the Ring into the world.
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