Cigars were packed in boxes, crates, and barrels as early as 1800, but the small sized boxes that we are familiar with today did not exist prior to around 1840. Until then, cigars were shipped in larger crates containing 100 or more per case. After 1840, cigar manufacturers started using smaller, more portable boxes with 20-50 cigars per box.
Trace evidence of cigar box instruments exist from 1840 to the 1860s. The earliest illustrated proof of a cigar box instrument known is an etching copyrighted in 1876 of two Civil War Soldiers at a campsite with one playing a cigar box fiddle. The etching was created by illustrator and artist Edwin Forbes who, under the banner of Frank Leslie's Illustrated Newspaper, worked for the Union Army. The etching was included in Forbes work Life Stories of the Great Army. In the etching, the cigar box fiddle clearly shows the brand ‘Figaro’ on the cigar box.
In addition to the etching, plans for a cigar box banjo were published by Daniel Carter Beard, co-founder of the Boy Scouts of America, in 1884 as part of 'Christmas Eve With Uncle Enos.' The plans, eventually retitled ‘How to Build an Uncle Enos Banjo’ as part of Beard's American Boy’s Handy Book in the 1890 release as supplementary material in the rear of the book. These plans omitted the story but still showed a step-by-step description for a playable 5-string fretless banjo made from a cigar box.
It would seem that the earliest cigar box instruments would be extremely crude and primitive; however, this is not always the case. The National Cigar Box Guitar Museum, according to One Man's Trash: A History of the Cigar Box Guitar, has acquired two cigar box fiddles built in 1886 and 1889 that seem very playable and well built. The 1886 fiddle was made for an 8 year old boy and is certainly playable, but the 1889 fiddle has a well carved neck and slotted violin headstock. The latter instrument was made for serious playing.
The cigar box guitars and fiddles were also important in the rise of jug bands and blues. As most of these performers were black Americans living in poverty, many could not afford a "real" instrument. Using these, along with the washtub bass (similar to the cigar box guitar), jugs, washboards, and harmonica, black musicians performed blues during socializations.
The Great Depression of the 1930s saw a resurgence of homemade musical instruments. Times were hard in the American south and for entertainment sitting on the front porch singing away their blues was a popular pastime. Musical instruments were beyond the means of everybody, but an old cigar box, a piece of broom handle and a couple wires from the screen door and a guitar was born.
A modern revival of these instruments (also known as the Cigar Box Guitar Revolution) has been gathering momentum with an increase in cigar box guitar builders and performers. A loose-knit tour of underground musicians tour the East Coast (US) each summer under the banner "Masters of the Cigar Box Guitar Tour." These musicians include Doctor Oakroot, Johnny Lowebow, Tomi-O and many others. Also, there is a growing number of primitive luthiers adding cigar box guitars to their items for sale.
Modern revival is sometimes due to interest in jugband and the DIY culture, as a cigar box is relatively inexpensive when considering other factors, such as strings and construction time. Many modern cigar box guitar can thus be seen as a type of practice in lutherie, and implement numerous personal touches, such as the addition of pick up and resonator cones into it.
The modern revival of cigar box guitars is documented in the 2008 film, "Songs Inside The Box" which was shot primarily at an annual Huntsville, Alabama event called the Cigar Box Guitar Extravaganza. 
Luther Dickinson, the guitarist of the North Mississippi Allstars, uses an electric cigar box guitar called the "Lowebow."
Billy Gibbons of ZZ Top performs with a cigar box guitar made by Kurt Schoen.
Richard Johnston, the subject of the 2005 Max Shores documentary Richard Johnston: Hill Country Troubadour, performs with a Lowebow. Johnston helped design the instrument with the builder, John Lowe.
Tom Waits plays cigar box banjo on his album Real Gone.
Seasick Steve plays several personalised and obscure instruments including a cigar box guitar )
Ed King of Lynyrd Skynyrd plays a cigar box guitar made by Tomi-O.
Harry Manx, a Hindustani slide master, plays a Lowebow cigar box guitar.
Chris Ballew, lead singer of The Presidents of the United States of America, has recorded with a one-string cigar box bass made by Shane Speal.
Kevin M. Kraft, an eclectic singer-songwriter in Kansas City, Missouri, uses, as his instrument of choice his own home-built cigar box slide guitars almost exclusively, and as an independent filmmaker featured the diddly bow in his critically acclaimed short film DRIFTERS.
Joe Buck, one-man-band performer and also a member of Hank Williams III's band Assjack, plays a cigar box guitar made by Tomi-O.
Robert Hamilton of the Low-Country Messiahs plays a 3-string Tomi-O cigar box guitar.
PJ Harvey plays a Baratto Cigfiddle.
Charlie Brown, of the Peanuts comic strip, played a cigar-box banjo a few times in his first years (early 1950s)
Lightnin' Hopkins Played a cigar box guitar at times and said this on the subject:
So I went ahead and made me a guitar. I got me a cigar box, I cut me a round hole in the middle of it, take me a little piece of plank, nailed it onto that cigar box, and I got me some screen wire and I made me a bridge back there and raised it up high enough that it would sound inside that little box, and got me a tune out of it. I kept my tune and I played from then on.
(This information courtesy of Wikipedia)