Horizon Zero Dawn was developed on DECIMA game engine, which is developed entirely in-house by Guerrilla Games. It is an extremely powerful and potent game engine that helped them in developing the open world structure of Horizon Zero Dawn while also delivering powerful visuals that utilized the full potential of the PS4 hardware.
We learn from the presentation based on the creation of Tools Pipeline at GDC 2017 that the engine started its development back in November 2013. Judging from this timeline, the development started right around the launch of Killzone Shadowfall, which was based on an earlier version of the DECIMA engine.
The earlier iteration of the engine was rather archaic and resulted in some headache for the developers. It wasn’t suitable for an open world game leading Guerrilla Games to develop a more effective and improved version of it.
There goal with the engine was to create a tool that offered an all-in-one solution unlike their past one, which used to add further overhead in game development. The result was the DECIMA game engine which allows the developers to tweak and produce a game in-development without effecting the production pipeline.
One such example that they gave was for a system called Game Sync that allowed the developers to implement changes on the fly, as the game simply paused while the changes were applied. This was not stable as stated by Guerrilla Games and they plan to work more on it so that it is improved for their next game.
Guerrilla Games also highlighted some of their future goals for the DECIMA engine which you can check below. We highly recommend reading the whole GDC presentation that goes further in detail behind the creation of their tools pipeline for Horizon Zero Dawn.