The form of pictorial art known as the silhouette dates back to stone-age man, who traced the outline of a person's shadow on the wall of his cave, then filled it in with colored pigments. The ancient Greeks also traced shadows to draw profile portraits.
Profile portraiture became popular in Europe in the 17th century, when artists used a candle or lamp to cast their subject's shadow against a wall or screen. When paper came into abundant supply, artists began to cut out their profile portraits from black paper and mount them on light-colored backing. This kind of silhouette construction was all the rage in Europe around the middle of the 18th century.
The term we use to refer to these outline drawings comes from Etienne de Silhoette, the French finance minister in 1759. Silhoette instituted a series of new taxes that were particularly odious to the wealthy, and attempted to cut back the expenditures of the royal household. He was forced to resign after only a few months in office, but his name was applied to a new kind of men's pocketless trousers, and a la Silhoette came to mean "on the cheap" in reference to his parsimonious fiscal policy.
Partly because cut-out paper portraits were considered art "on the cheap," and partly because Silhoette himself produced paper profiles as a hobby, these black outline drawings soon came to be known as "silhouettes."