Carpets were probably first made by nomadic peoples to cover the floors of their tents. Certainly, by the 5th century BC carpeting had reached an artistic level. This was proven by Russian archaeologists Rudenko and Griaznov, who in 1949 discovered the oldest known carpet in the Pazyryk valley, about 5000 feet on the Altai Mountains in Siberia.

Pazyryk carpet was preserved in the frozen tombs of Scythian chiefs, which were between 2400 to 2500 years old. The carpet is of rare beauty and was woven with great technical skills. Persia remained as the center of carpet making throughout history, where woven carpets became an art form.

In 539 BC, at the time when Babylon was conquered by Cyrus the great, it was feasible that Cyrus introduced this art into Babylon. In Persepolis (Pasargadae), where Cyrus's tomb is located, it is said that his tomb was covered with precious carpets. Even before Cyrus, it is feasible that Persian nomads excelled in carpet making where a huge amount of wool is supplied by their herds.

In China, the first documented evidence of carpet making dates between 224 to 641 AD. When the Arabs conquered Ctesiphon in 637, among the many spoils of war brought were carpets, the most famous of which was the garden carpet "spring time of Khosroe". Made during the reign of Khosroe I (531 – 579) the carpet was 90 feet square.

Muslims regard carpets with special esteem and admiration. This value was multiplied because the Quran repeatedly mentioned carpets as furniture of heaven. In Surah 88, for example, the carpet is mentioned as a reward for believers.

"Other faces that day will be joyful, pleased with their striving, in a garden on high, where they shall hear no word of vanity: therein will be a bubbling spring, therein will be thrones of dignity, raised on high, goblets placed ready, and cushions set in rows, and rich carpets all spread out. Do they not look at the camels, how they are made? And the sky, how it is raised high? And at the mountains how they are fixed firm? And at the earth, how it is spread out?" – 88: 8-20

Muslim folk role has fascinating stories about flying carpets as can be read in a 1001 nights. Prayer carpets were introduced between the 17th and 18th century through the Turks. Following the period of dominion by Arab Caliphates, the Seljuk Turks conquered Persia. Between Seljuk rule of 1038 to 1194, Persian carpeting craft was transferred into Turkey.

In Europe, carpet making was virtually unknown. Floors were covered with rushes and were renewed from time to time. This practice continued until the second half of the 15th century. The first reproduction of Muslim carpets in Europe was undertaken in England during the reign of Elizabeth I.

The first carpet was produced in 1570 at Gorhambury. Between 16th and 17th century, smaller carpets were used to cover chairs and tables. By the 18th century the carpet industry was well established in Britain, then other European countries followed suit.


References:

http://www.farhangsara.com/carpet_history.htm
http://muslimheritage.com/topics/default.cfm?ArticleID=402
http://www.raken.com/style/eng/historique/tapis_tapisserie.asp