The first stirrings toward this proverb appear to have come from the English dramatist John Lyly, who wrote in 'Euphues in England' (1580). 'As neere is Fancie to Beautie, as the pricke to the Rose,' and from William Shakespeare, who in 'Love's Labour's Lost' (c.1594) penned the line 'Beauty is bought by judgement of the eye.' Almost a century and a half later, Benjamin Franklin in his 'Poor Richard's Almanack' of 1741 included the lines, 'Beauty, like supreme dominion / Is but supported by opinion,' and Scottish philosopher David Hume's 'Essays, Moral and Political' (1742) contained the perhaps too analytical 'Beauty in things exists merely in the mind which contemplates them.' It was not until 1878, however, that the modern wording of the proverb first appeared in 'Molly Brown,' by the Irish novelist Mr. Margaret Hungerford. The saying has been repeated frequently in the twentieth century.
From "Wise Words and Wives' Tales: The Origins, Meanings and Time-Honored Wisdom of Proverbs and Folk Sayings Olde and New" by Stuart Flexner and Doris Flexner (Avon Books, New York, 1993).
You should remember, my dear, that beauty is in the lover's eye. (F. Brooke, History of Mary Montague, 1769)
Most true is it that 'beauty is in the eye of the gazer.' (C. Bronte, Jane Eyre, 1847)
Beauty is in the eye of the beholder. - mid 18th century; 3rd century BC in Greek (The Oxford Dictionary of Quotations, Fifth Edition, p. 595 "Proverbs")