It's an Italian invention, originally known as Pâte Génoise or pan genovese. In the mid 1700s, a famous Genoese cook, Giobatta Cabona, was invited by the Genoese ambassador to prepare a banquet for the Spanish court in Madrid.
For the occasion he created a superb, light and airy example, which took the name pan di spagna to flatter the court, and the rest is history. Today it's used as a base for a wide variety of desserts.
Image by Kimberly Vardeman