The Geisha's earliest ancestor is the Kawaramono (Riverbed Folk). These people populated ghettos and sold their wares in dry riverbeds or along riverbanks.
The predecessor to the Geisha was named Izumo No Okuni. She claimed to be a priestess, but this is doubtful. She assembled a group of dancers and began to perform on a stage in the riverbed. These dancers developed a new style, which was named Kabuki, meaning "to be wild and outrageous". She was a fantastic dancer and soon developed a large following of fans. Her male fans began to fight over the beautiful, talented, dancer and the Shogunate shut down the operation. The out of work dancers, would inspire the first Geisha.
The first pleasure quarter came to be in the year 1589, when a stable keeper received permission to open a brothel. He built a walled quarter which he called Yanagimachi (Willow World). He built a few teahouses and brothels, and hired some of the high-class courtesans to lure in the wealthy. The Willow World was a great success.
The courtesans were broke into a few groups. The highest rank would be the Tayu and the Oiran. They were permitted inside the palace and were the concubines of royalty. Most didn't make the high class and became yujo, basically, prostitutes who waited to be chosen by a customer.
The term Geisha, suprisingly, is unisex. The first Geisha were male. They were called the Taikomochi. They did, and still do (there are only 5 or 6 left), everything that the Geisha do (I.E.. dancing, singing, performing, chatting). They were the ring masters and they did it very well. They were extremely funny, and like their female counterparts, loved to brush upon taboo subjects for laughs.
The first woman to use the term Geisha was Kikuya. She was a prostitute who had become famous for her dancing and shamisen playing. She decided to become an entertainer. At the same time, it became fashionable to host parties where dancing girls (Odori-Ko) performed. Kikuya was one of these dancers, and along with tea brewing women, and drum players took on the name Geisha. They wished to be respected as artists. They were, and became quite successful.
Slowly, the Geisha began to take over the Pleasure Quarter and the Tayu and Oiran faded from the minds of the wealthy. This new breed of woman, these Geisha, were witty, free spirited, independent, and intelligent. They provoked thought and could hold up their end of a conversation with ease. Most of all, their art skills far surpassed those of anyone before them.
The Geisha must rely on their talent, as their plumage was severely restricted. They were mandated to be much more plain than the courtesans and thus took to wearing monochrome kimono, and only a few hairpins: One large, one small and one comb. Geisha were given strict rules about their conduct. They weren't allowed to take part in prostitution and couldn't interfere with the courtesan's business in any way. They were even chosen from the less beautiful women and were forbidden to work alone, only in twos or threes. They were escorted from place to place to be sure that they followed the strict rules. If any geisha was accused of prostitution she would be subject to an inquisition by the geisha office, or Kemban.
Even with the many laws, the Geisha became far more popular than the Tayu and Oiran and virtually replaced them and their place in Japanese society.
In the early 1900's the Geisha business was booming and not all could join the ranks of the most the refined and beautiful. Young and poor girls were sold to okiyas by their families to make ends meet. This was a time when only the most beautiful and promising young girls were chosen. The ones who were rejected would become the denizens of the red light districts. These are the women who were in fact, paid for sex, rather than a night of conversation and art. This was the sad truth.
The true geisha however, thrived. They grew in numbers, reaching several thousand, and every night they left their houses, en-masse, to clip-clop to their appointments, like brightly plumed birds. By this time the restrictions on their clothing and hairpins were largely repealed, allowing them the luxury of wearing the finest fabrics and gold and silver embroidery. The wealth of the upper-class businessman was whiled away in the flower and willow world, though neither side, businessmen nor geisha, objected. Life was lavish and money flowed freely.
But as with any large group of people in close quarters, there will always be some who can't manage to get along well. Though tranquil on the surface, there was rough water below. Relationships in the karyukai were sometimes difficult. Competition to become the most prestigious geisha was fierce and some geiko as well as okasans, were ruthless in their pursuit for the top.
Recent times haven't been so kind to the geisha. A new Japan has emerged, one who seems to have a waning appreciation for the traditional arts. In turn, fewer and fewer seek out the life of the eternal beauty and artisan of old Japan. Only a couple of new maiko apply each year, and even fewer will decide to stay on to become full fledged geisha. They seem not to realize that the Geisha life, while glamorous on the outside, is actually a life of hard work and dedication. Though some see the end of the Karyukai, other believe that the ever cunning geisha will continue on "as long as there is tatami in Japan". Only time will tell.
I would like to insert my little comment, so bear with me: I truly hope that the Geisha will continue on, and remain the beautiful, intelligent, self sufficient, and wonderfully talented women that they have always been and the keepers of the traditional arts.