Late 1980s to 1990s - Unix: password shadowing

"Password shadowing first appeared in UNIX systems with the development of System V Release 3.2 in 1988 and BSD4.3 Reno in 1990."
Wikipedia
Shadow Password Suite by Julianne Frances Haugh, 1988+
It took many years for the various Unix-like systems, individual Linux distributions, etc. to catch up (although a few were pretty quick)

Password hashes were moved out of /etc/passwd and into file(s) not readable by regular users.  Typical filenames are /etc/shadow (SysV and others) and /etc/master.passwd (BSD), although some "trusted" systems use per-user files under /tcb or /etc/tcb.

In 2001, Openwall GNU/*/Linux made use of per-user shadow files under /etc/tcb to reduce privileges of the password-changing program, passwd(1) - something those "trusted" systems did not do