Basically, the dollar sign evolved from a ligature for Pesos. Ps. Its origin is traced to a merchant, John Fitzpatrick in Florida circa 1770. However, only a few years later, in 1777 it appeared in American Revolutionary documents.

#076 THE PUZZLING ORIGIN OF THE DOLLAR SIGN ($) (Chicago, 1991) by Eric P. Newman. The origin of the symbol and the date of the first use of the dollar sign ($) in written form is explained. (A speech at the American Numismatic Association convention. 1.0 hrs. )

"The dollar sign : its written and printed origin" by Eric P. Newman. In: Kleeberg, John M., ed. _Coinage of the Americas Conference. Proceedings No. 9. America's silver dollars_, New York: American Numismatic Society,c1995 p. 1-49 pp. 5-16 Vol. 70, No. 2 (Feb. 1957), pp. 137-147. [The paper was delivered at a "Coinage of the Americas Conference" in 1957. It was reprinted in an anthology of COAC papers in 1995 -- MEM]

You can find a summary in _Greenback: the almighty dollar and the invention of America_ by Jason Goodwin, New York: Henry Holt; 2003, which is viewable on Google Books. See pages 122-123.