Camera
If you already own a digital camera, you can use it to take panoramic photographs. If not, there are a few things you will want to keep in mind when purchasing your camera. Digital cameras can be very costly. Even if you're working on a tight budget, purchase the best camera you can afford. You can choose to purchase a DSLR or a point-and-shoot style, but you will need a camera with full manual modes, meaning it should have an option from which you can choose the aperture, shutter speed and ISO. Some DSLRs, and even point-and-shoot cameras, include a panoramic mode, which will show the last photograph you've taken alongside the live image in the viewfinder. The dual display allows you to make sure that you're framing the current photograph correctly. The lenses that come with most digital cameras are adequate. You will want to avoid using super wide angle lenses to prevent distortion.
Tripod
While not absolutely necessary to take a panoramic photograph, having a tripod will greatly improve your shots. You tripod should be a free swiveling tripod so the camera can rotate 360 degrees. Using a tripod will reduce camera shake, making your panoramic photographs clearer. Additionally, a tripod is very useful in panoramic photography because you can move the camera side to side for each frame of the photograph without accidentally changing the upward or downward angle of the camera.
Level
A level is just as necessary as the camera itself in panoramic photography. Some tripods have levels mounted on them; however, it's a good idea to mount a small handheld level on top of your camera. Camera manufacturers produce levels specially for this, or you can pick one up at your local hardware store.
Photo Stitching Software
While not a physical piece of camera gear, the photo stitching software is where the magic happens. A good program can make binding your images together quick and easy. Many programs on the market are made for photo stitching, and they can take the guess work out of overlaying. Many digital cameras on the market include photo stitching software bundled with the camera.