The modern telephone is the culmination of work done by many individuals, all worthy of recognition for their contributions to the field. Alexander Graham Bell was the first to patent the telephone, an "apparatus for transmitting vocal or other sounds telegraphically", after experimenting with many primitive sound transmitters and receivers. However, the history of the invention of the telephone is a confusing collection of claims and counterclaims, made no less confusing by the many lawsuits which attempted to resolve the patent claims of several individuals.

Alexander Graham Bell of Scotland is commonly credited as the first inventor of the telephone. The classic story of his crying out "Watson, come here! I want to see you!" is a well known part of American history. But Alexander Graham Bell was also an astute and articulate business man with influential and wealthy friends.

As Professor of Vocal Physiology at Boston University, Bell was engaged in training teachers in the art of instructing deaf mutes how to speak, and experimented with the Leon Scott phonautograph in recording the vibrations of speech. This apparatus consists essentially of a thin membrane vibrated by the voice and carrying a light stylus, which traces an undulatory line on a plate of smoked glass. The line is a graphic representation of the vibrations of the membrane and the waves of sound in the air.

This background prepared him for work with sound and electricity. He claimed to have began his researches in 1874 with a musical telegraph, in which he employed an on-off-on-off make-break circuit driven by a vibrating iron reed which created interrupted current to vibrate the receiver, which consisted of an electro-magnet causing an iron reed or tongue to vibrate, exactly the same as Bourseul, Reis, Gray, and Antonio Meucci. During a 2 June 1875 experiment by Bell and his assistant Watson, a reed failed to respond to the intermittent current supplied by an electric battery. Bell told Watson, who was at the other end of the line, to pluck the reed, thinking it had stuck to the pole of the magnet. Mr. Watson complied, and to his astonishment Bell heard a reed at his end of the line vibrate and emit the same overtones of a plucked reed, although there was no interrupted on-off-on-off current to make it vibrate. A few experiments soon showed that his reed had been set in vibration by the magneto-electric currents induced in the line by the mere motion of the distant reed in the neighbourhood of its magnet. The battery current was not causing the vibration but was needed only to supply the magnetic field in which the reeds vibrated. Moreover, when Bell heard the rich overtones of the plucked reed, it occurred to him that since the circuit was never broken, all the complex vibrations of speech might be converted into undulating (alternating) currents, which in turn would reproduce the complex frequencies of speech at a distance.

After Bell and Watson discovered on June 2, 1875 that movements of the reed alone in a magnetic field could reproduce the frequencies of spoken sound waves, Bell reasoned by analogy with the mechanical phonautograph that a skin diaphragm would reproduce sounds like the human ear when connected to a steel or iron reed or hinged armature. On 1 July 1875, he instructed Watson to build a receiver consisting of a stretched diaphragm or drum of goldbeater's skin with an armature of magnetized iron attached to its middle, and free to vibrate in front of the pole of an electromagnet in circuit with the line. A second membrane-device was built for use as a transmitter. This was the "gallows" phone. A few days later they were tried together, one at each end of the line, which ran from a room in the inventor's house in Boston to the cellar underneath. Bell, in the work room, held one instrument in his hands, while Watson in the cellar listened at the other. Bell spoke into his instrument, “Do you understand what I say?” and Mr. Watson answered “Yes”. However, the voice sounds were not distinct and the armature tended to stick to the electromagnet pole and tear the membrane.

Bell's patent, U.S. Number 174,465, has been called the most valuable ever issued

Elisha Gray, of Chicago also devised a tone telegraph of this kind about the same time as La Cour. In Gray's tone telegraph a vibrating steel reed interrupted the current, which at the other end of the line passed through an electromagnet and vibrated a matching steel reed near its poles. Gray's 'harmonic telegraph,' with vibrating reeds, was used by the Western Union Telegraph Company. Since more than one set of vibration frequencies — that is to say, more than one note — can be sent over the same wire simultaneously, the harmonic telegraph can be utilised as a 'multiplex' or many-ply telegraph, conveying several messages through the same wire at the same time; and these can either be read by the operator by the sound, or a permanent record can be made by the marks drawn on a ribbon of travelling paper by a Morse recorder. On 27 July 1875, Gray was granted U.S. patent 166,096 for "Electric Telegraph for Transmitting Musical Tones" (the harmonic telegraph).

On 14 February 1876, Gray filed a patent caveat for a telephone on the very same day in 1876 as did Bell's lawyer. The water transmitter described in Gray's caveat was strikingly similar to the experimental telephone transmitter tested by Bell on March 10, 1876, a fact which raised questions about whether Bell (who knew of Gray) was inspired by Gray's design or vice versa. Although Bell did not use Gray's water transmitter in later telephones, evidence suggests that Bell's lawyers may have obtained an unfair advantage over Gray.