The first photograph was made in 1814 by Joseph Nicéphore Niépce using a sliding wooden box camera made by Charles and Vincent Chevalier in Paris, the photograph was not permanent though and it faded.

Niépce built on a discovery by Johann Heinrich Schultz (1724): a silver and chalk mixture darkens under exposure to light. While this was the introduction of photography, the history of the camera can be traced back much further.

Photographic cameras were a development of the camera obscura, a device dating back to the Book of Optics (1021) of the Iraqi Arab scientist Ibn al-Haytham (Alhacen), which uses a pinhole or lens to project an image of the scene outside onto a viewing surface.

Before the invention of photographic lapel processes there was no way to preserve the images produced by these cameras apart from manually tracing them.

The earliest cameras were room-sized, with space for one or more people inside; these gradually evolved into more and more compact models such as that by Niépce's time portable handheld cameras suitable for photography were readily available.

The first camera that was small and portable enough to be practical for photography was built by Johann Zahn in 1685, though it would be almost 150 years before such an application was possible.

Source: http://en.wikipedia.org/wiki/History_of_the_camera