Greenfish Icon Editor Pro (aka GFIE Pro) is a powerful open source icon, cursor, animation, icon library and image editor. It can be used to create Vista compatible icons up to 256×256. It has a variety of drawing tools and filters. It can open/save ICO, PNG, CUR, BMP, BMP, GIF, JPEG, ANI files and animated cursors.
A tutorial for converting pictures to icons can be found on Instructables.
Ranked in these QuestionsQuestion Ranking
Pro Open source
Written with the free Lazarus (open source Delphi like) development environment, the Greenfish Icon editor source code is included in the download.
Pro Windows and Linux versions
As it's developed in the Lazarus language.
Because of all the advanced functionality this is not the easiest icon editor, so beginners might prefer a more limited simple icon editor.