It was developed by Louis Daguerre together with Joseph Nicéphore Niépce. Niepce had produced the first photographic image in the camera obscura using asphaltum on a copper plate sensitised with lavender oil that required very long exposures.
The image in a Daguerreotype is formed by the amalgam, or alloy, of mercury and silver. Mercury vapor from a pool of heated mercury is used to develop the plate that consists of a copper plate with a thin coating of silver rolled in contact that has previously been sensitised to light with iodine vapour so as to form silver iodide crystals on the silver surface of the plate.
Exposure times were later reduced by using bromine to form silver bromide crystals, and by replacing the Chevalier lenses with much larger, faster lenses designed by Joseph Petzval.
Credit: http://en.wikipedia.org/wiki/Daguerreotype