Mouseless is a project by Pranav Mistry of the MIT Fluid Interfaces Group. He calls it an "invisible computer mouse" that creates the feeling of using a mouse without actually having a physical device. This is achieved via an infrared beam and sensor, which will help detect the hand's position. So all that's left for the user to do is move a cupped hand as if it were holding a mouse and the system will detect its movement and clicks.
This is a research project, so we won't get to try it out unless it goes commercial. On his project page, Mistry says his team implemented a working prototype at a cost of about $20. Watch the video to see it in action.