A medium of painting in which a water-soluble pigment is suspended in gum arabic. Other non-traditional forms of watercolor include gouache and acrylic. The history of watercolor is as old as humanity. Primitive man applied water soluble pigments with bone, sticks or fingers to cave walls. The Ancient Egyptians used water-based paints to decorate the walls of temples and tombs and created some of the first works on paper, made of papyrus. Modern forms of watercolor painting emerged in the Far and Middle East. Chinese and Japanese artists depicted calligraphy and often landscapes, which were later the hallmark of the Western watercolor artist. During the Middle Ages, illuminated manuscripts that were meticulously copied from scripture and intricately decorated with scrollwork and illustration were the lifelong works of many monks. Continuing into the Rennaisance, artists used fresco to create elaborate murals, the most famous being the Sistine Chapel of the Vatican by Michelangelo.

The single biggest limitation to the development of the art of watercolor was the availability and quality of paper. Paper had to be imported into the West up until the 18th century, at which point the first prominent schools began to develop in Britain and America. The rest of Europe largely disregarded watercolor as the medium of amateurs. Watercolor paper is designated as hot-pressed, cold-pressed or rough, and each will produce varying levels of absorption and transparency for different effects. Brushes must provide a large reservoir and a tapered point for accurate application.

Techniques unique to watercolor include washes, underdrawing, subtractive methods involving wax or stencils, and texture effects involving salt or plastic wrap. Watercolor artists attest to the unique spontanaeity of the medium, and improvisation is vital. Because of its transparency watercolor is most differentiated from other mediums by its luminosity, which artist will often contrast with an opaque dry-brush technique.

Sources:
http://home.xnet.com/~honore/watercolors/watercolorpages/sup/history.html
http://www.nyss.org/watercolor/Shatter/twow.cover.html