Painting in watercolours is the oldest painting technique. Our prehistoric ancestors painted their caves with pigments that were diluted with water. The Egyptians and Mediterranean people used water-based paint for their murals and Japanese used it on parchment. The earliest watercolour paintings are the illustrations of Egyptian tomb scenes on papyrus, dated 2nd millennium BC.
Paper (which handles and absorbes watercolour paint much better than parchment) was invented in China around 0 BC. In the 12nd century  the first paper appeared in Spain, brought there by the Moors and Italy picked it up shortly after. Some of the paper producers are still around: Fabriano since 1276 and Arches (the producers of the paper I use) in France since 1492. After the invention of book printing in the middle ages, paper gradually replaced parchment.
Nowadays’ aquarelle technique may well have its origin in the frescos: wall paintings with watercolours on wet plaster. Well-known frescos are those in the Sistine Chapel, created beginning 16th century. Since that time, aquarelle was used more and more to colour sketches, studies and designs. Primarily as a preparation for a more definitive technique.
Albrecht Dürer (1471-1528) was the first to use aquarelle as more than just support. His carefully observed and detailed work was always in aquarelle.
In the l8th century, the popularity of aquarelle increased, especially in England. Joseph Mallord William Turner (1775 – 1851) for example, used watercolours as a stand alone art form, his aquarelles were large, dimensions that were usually reserved for oil paintings. His aquarelles are beautifully transparent.
Two other well known artists who mainly used watercolours are Cézanne and Kandinsky.