Ian Cameron Esslemont and Steven Erikson co-created the MALAZAN world whilst playing ADVANCED DUNGEONS & DRAGONS, 1st Edition, back in 1982, though they customised the rules a lot. They switched to GURPS around 1987 or so as they found it a lot more customisable.

Esslemont and Erikson were both GMs and players at different points, with a rotating number of other players. Sometimes just the two of them have gamed out various scenarios. Their original campaign was the backstory to the MALAZAN world: Kellanved and Cotillion taking over a bar in Malaz City and going on to forge a massive empire, with different people playing characters like the Emperor, Whiskeyjack, Fiddler, Quick Ben etc over a long period of time. The treasure ship guarded by a demon that sank in Malaz City Harbour was an incident from one of their campaigns as well.

The world was apparently much looser in the AD&D days but came together more decisively whilst they were using GURPS. Apparently Esslemont started writing fiction first, writing both NIGHT OF KNIVES and RETURN OF THE CRIMSON GUARD by 1989, and these codified a lot of the stuff they'd been creating freeform in the game. Erikson continued that process by writing GARDENS OF THE MOON in 1991 (developed from a film script they'd worked on together).

In an interview somewhere, Erikson lists some of the characters he and ICE played. Something I was struck by is that a lot of the more memorable characters - Whiskeyjack, Anomander Rake, Karsa Orlong (IIRC) - were actually played by ICE.