Wolves and dogs share a common ancestor, the progenitor of all modern canids,
hesperocyonines, which looked similar to a cross between a weasel and a fox, and evolved in North America around 40 million years ago. Hesperocyonines went extinct about 15 million years ago, leaving 2 offshoots, one of which survives as the family Canidae. About 35 million years ago another dead end, the hyena-like
borophagines evolved, going extinct about 2.5 million years ago. The other offshoot, canids, includes all extinct and existing species of canid, including the domestic dog. Having evolved in North America, canids crossed a land bridge to Asia about 7 million years ago, and within a million years or so had made into and throughout Europe and the African continent. DNA analysis indicates dogs evolved from wolves about 130,000 years ago, and that the sub-species peculiar to Australia are descended from African ancestors.
I've got some
experience with wolves and wolf-dog hybrids; starting about the second page of
this topic, I get into a related discussion with somebody who was considering getting one. I hope that individual thought better of that plan.