The sources for wearing a kippah can be found in the Talmud. In tractate Shabbat it states you should Cover your head in order that the fear of heaven may be on you. As well, in tractate Kiddushin it states Rabbi Honah ben Joshua never walked 4 cubits with his head uncovered. He explained: Because the Divine Presence is always over me. The obligation of wearing a yarmulke, halakhic experts agree that it is a custom. The prevailing view among Rabbinical authorities is that this custom has taken on a force of law because it is an act of Kiddush Ha-Shem, "Sanctifying the Holy Name". From a strictly talmudic point of view, however, the only moment when a Jewish man is required to cover his head is during prayer (Mishne Torah, Ahavah, Hilkhot Tefilah 5:5).
Even this interpretation is in question; as recently as the 1600 huderds , scholar David Haley of Ostrog, Russia, suggested that all Jews should never uncover their heads in order to help distinguish them from Christians- especially while they are at prayer.
A Hasidic/Kabbalist tradition states that the kippah reflects several ideas: one is that Ha-Shem covers us with His Divine Palm; indeed, the Hebrew word kaf means either "cloud" or "palm of the hand". The Hebrew letter kav is the first letter of the word kippah.
Reasons given for wearing a kippah today include:
recognition that God is "above" humankind;
"identification" with the Jewish people;
demonstration of the "ministry" of all Jews.