This article is from the World English Bible Translation FAQ, by Michael Paul Johnson firstname.lastname@example.org with numerous contributions by others.
In Hebrew, there is no such thing as upper and lower case. The
original Greek manuscripts were written in all upper case letters.
Therefore, this is mostly a question of English style more than a
question of conforming to the original language texts. English style
is a moving target, and there is not widespread agreement on
capitalization of pronouns referring to God. In the time of the King
James Version, it was common practice to capitalize pronouns pertaining
to any king or other national leader. Since God is the King of Kings,
it only made sense to capitalize pronouns referring to God. In modern
English, we don't do that, even when writing very respectfully. In
modern English, it is considered correct to either capitalize or not
capitalize pronouns referring to God, but the practice should be
consistent within a book. Other contemporary translations of the Holy
Bible into English are pretty much evenly split between capitalizing
and not capitalizing these pronouns.
There are three other translational issues involved. One is that it
seems rather awkward to translate quotations of people who were deriding
Jesus Christ, and who at that point didn't believe that He was the
spotless Son of God, capitalizing the pronouns they used to refer to
Him. The New American Standard Bible handles this by putting in a
footnote to explain that they capitalized the pronouns because of who
Jesus Christ is, not who the speaker thought He was.
Another issue is that in some of the coronation psalms, it was clear
that the psalm was originally written for the coronation of an earthly
king (i. e. King Solomon), but the psalm applies and is used more often
to sing praises to the King of Kings. In that case, it is difficult to
choose which case to use for the pronouns. By not capitalizing pronouns
pertaining to God, we as translators preserve the ambiguity of the
original Scriptures and leave the application to the Holy Spirit and
The third translational issue is a more practical one. Because the
World English Bible is an update of the American Standard Version of
1901, which does not capitalize pronouns referring to God, it would have
required reviewing all pronouns in the Bible for capitalization,
determining from the context which referred to God and which did not.
Even when done carefully, there is a risk of making errors in the
process, and in some cases (such as those mentioned above), footnotes
would be in order to explain the ambiguities that would be totally
unnecessary without the capitalization.
Therefore, we have decided to retain the ASV's capitalization rules
in the Bible text.