Although Sauron knew that Men were easier to sway, he sought to bring the Elves into his service, as they were far more powerful. By about SA 1500, Sauron put on a fair visage and called himself Annatar, the "Lord of Gifts". The Unfinished Tales tells that Annatar assumed the guise of an emissary of the Valar "anticipating the Istari".
He befriended the Elf smiths of Eregion including Celebrimbor, a descendant of Fëanor and the greatest living craftsman. Sauron would go on to counsel them in both new forms of metallurgy and magic.
Eventually, Sauron gave the Elven smiths he worked with the knowledge and encouragement to forge magic Rings, which he infused with potent spells without their knowledge. These included the great Rings of Power while he forged the One Ring in secret, to rule the Elvish rings.