Paper cups have been documented in imperial China, where paper was invented by 2nd century BC. Paper cups were known as chih pei and were used for the serving of tea. They were constructed in different sizes and colors, and were adorned with decorative designs. Textual evidence of paper cups appears in a description of the possessions of the Yu family, from the city of Hangzhou.
The modern paper cup was developed in the 20th century. In the early 20th century, it was common to have shared glasses or dippers at water sources such as school faucets or water barrels in trains. This shared use caused public health concerns. One notable investigation into their use was the study by Alvin Davison, biology professor at Lafayette College, published with the sensational title “Death in School Drinking Cups” in Technical World Magazine in August 1908, based on research carried out in Easton, Pennsylvania’s public schools. The article was reprinted and distributed by the Massachusetts State Board of Health in November 1909.
FROM: Wikipedia