The term "photovoltaic" comes from the Greek (phos) meaning "light", and "voltaic", meaning electric, from the name of the Italian physicist Volta, after whom a unit of electrical potential, the volt, is named. The term "photo-voltaic" has been in use in English since 1849.

The photovoltaic effect was first recognized in 1839 by French physicist A. E. Becquerel. However, it was not until 1883 that the first solar cell was built, by Charles Fritts, who coated the semiconductor selenium with an extremely thin layer of gold to form the junctions. The device was only around 1% efficient. Sven Ason Berglund had a number of patents concerning methods of increasing the capacity of these cells. Russell Ohl patented the modern junction semiconductor solar cell in 1946 (U.S. Patent 2,402,662 , "Light sensitive device"), which was discovered while working on the series of advances that would lead to the transistor.

The modern age of solar power technology arrived in 1954 when Bell Laboratories, experimenting with semiconductors, accidentally found that silicon doped with certain impurities was very sensitive to light. This resulted in the production of the first practical solar cells with a sunlight energy conversion efficiency of around 6 percent. The first spacecraft to use solar panels was the US satellite Vanguard 1, launched in March 1958 with solar cells made by Hoffman Electronics. This milestone created interest in producing and launching a geostationary communications satellite, in which solar energy would provide a viable power supply. This was a crucial development which stimulated funding from several governments into research for improved solar cells.

In 1970 the first highly effective GaAs heterostructure solar cells were created by Zhores Alferov and his team in the USSR. Metal Organic Chemical Vapor Deposition (MOCVD, or OMCVD) production equipment was not developed until the early 1980s, limiting the ability of companies to manufacture the GaAs solar cell. In the United States, the first 17% efficient air mass zero (AM0) single-junction GaAs solar cells were manufactured in production quantities in 1988 by Applied Solar Energy Corporation (ASEC). The "dual junction" cell was accidentally produced in quantity by ASEC in 1989 as a result of the change from GaAs on GaAs substrates to GaAs on Germanium (Ge) substrates. The accidental doping of Ge with the GaAs buffer layer created higher open circuit voltages, demonstrating the potential of using the Ge substrate as another cell. As GaAs single-junction cells topped 19% AM0 production efficiency in 1993, ASEC developed the first dual junction cells for spacecraft use in the United States, with a starting efficiency of approximately 20%. These cells did not utilize the Ge as a second cell, but used another GaAs-based cell with different doping. Eventually GaAs dual junction cells reached production efficiencies of about 22%. Triple Junction solar cells began with AM0 efficiencies of approximately 24% in 2000, 26% in 2002, 28% in 2005, and in 2007 have evolved to a 30% AM0 production efficiency, currently in qualification.