How The Wolf became the Dog
When the people first started taking wolf pups as pets, the pup adapted easily because wolves are very social. When the pup was grown up and a loyal guard wolf, they were kept and maybe breed. The pups that didn't turn out so good were likely released (Big no-no) or even killed. *sniff* But as the years went on, people would breed the wolf with others untill wolves where eventually what we know as the "dog."
"But how are there so many different breeds?" you may ask. This is because the people long, long ago probably breed runts of the litter together trying all sorts of combinations untill they got the colors etc. they wanted. This process took thousands of years and eventually ended up as our faithfull, loyal friend the dog.
Adapted from How the Wolf Became the Dog By John Zeaman