MIT Media Lab researchers have developed Mouseless, an invisible computer mouse that costs about $20 to build.

It uses an infrared (IR) laser beam and an infrared camera. The laser beam module creates a plane of IR laser just above the surface the computer sits on. The user cups their hand, and the laser beam lights up the hand that is in contact with the surface. The IR camera detects those bright IR blobs using computer vision. The change in the position and arrangements of these blobs are interpreted as mouse cursor movement and mouse clicks.

http://www.youtube.com/watch?v=yHGODp0b8Ks&feature=player_embedded

More info: Fluid Interfaces Group | MIT Media Lab