As it turns out, the reason the folks at Twitter picked 140 characters actually dates back to 1985. It all started with a decision made by Friedhelm Hillebrand, also known as “The Father of the Text Message.”

According to the LA Times, one day Friedhelm sat at his typerwriter at his home in Bonn, Germany and started writing a list of random sentences. When he went back through those sentences he noticed that they all clocked in under 160 characters and ran on for a line or two.

This initial, rather unscientific observation guided what would become more detailed studies that he oversaw while serving as chairman of the nonvoice services committee within the Global System for Mobile Communications (GSM). While in this position Hillebrand was influential in the early development of SMS technology standards for cell phone communications and from there the 160 character limit on text messages was born.

Twitter was built from the start to work via SMS in addition to the web, so because of this they built their service to meet this 160 character standard. The only difference was they kept an extra 20 characters open
to display user’s Twitter usernames. Any that’s why Twitter has a 140 character limit.

From the Twitter FAQ

We like to keep it short and sweet! It also just so happens that 140 characters is the perfect length for sending status updates via text message. The standard text message length in most places is 160 characters per message. We reserve 20 characters for people’s names, and the other 140 are all yours!