I am using this for more several years now. Even though all my workflow happens on Macintosh computers these days I’ve kept this tool in my toolbox: Microsoft Image Composite Editor.
Now after along while with the 1.0 version Microsoft Research decided to release a new version of the free tool with even more features and a new streamlined user interface. This is so much better than before.
“Image Composite Editor (ICE) is an advanced panoramic image stitcher created by the Microsoft Research Computational Photography Group. Given a set of overlapping photographs of a scene shot from a single camera location, the app creates a high-resolution panorama that seamlessly combines the original images. ICE can also create a panorama from a panning video, including stop-motion action overlaid on the background. Finished panoramas can be shared with friends and viewed in 3D by uploading them to the Photosynth web site. Panoramas can also be saved in a wide variety of image formats, including JPEG, TIFF, and Photoshop’s PSD/PSB format, as well as the multiresolution tiled format used by HD View and Deep Zoom.”
Source 1: http://research.microsoft.com/en-us/um/redmond/projects/ice/