Eru was the supreme deity and creator of Middle Earth in the Lord of the Rings Universe, but delegated almost all direct action to his children the Ainur. He is known also as the "All-Powerful", and he alone could create life or reality using the "Flame Imperishable".
Eru was transcendent, completely outside of and beyond the world. He first created the angelic Ainur. He then fashioned Eä, or all of existence, which was in the Void (or the Outside). The dwarves were created by the Ainur but consciousness was given to them by Eru. Elves and Mankind, however, came directly from Eru's thoughts.