Is drawing an original picture of a celebrity and selling it illegal?

This is a textbook question, which the United States Supreme Court has so far declined to consider (Comedy III v. Saderup, cert. denied, 534 U.S. 1078 (2002). Therefore, legality of your proposed business will vary State by State. The courts of California (home to so many celebrities) frequently are regarded as thought leaders in the jurisprudence of "rights of publicity." The California Supreme Court has indicated that where "the marketability and economic value of [a] work derives primarily from the fame of the celebrities depicted" such work violates the celebrities' rights of publicity. See Comedy III, 25 Cal.4th 387 (2001). However, where the original picture is sufficiently "transformative" so that the artistry in itself is seen to produce commercial value, then, your proposed business might be legal in California. See Comedy III. Overall, you need to hire a lawyer who understands art.

As my colleague correctly notes, this is an area where the rights of celebrities and the rights of artists collide. In the Saderup case, the artist lost, but that was a CA court that's arguably more (or maybe too) sensitive to the right of celebrities - the 3 stooges' heirs, no less. If you want to avoid litigation, see your own IP lawyer. If you want to make new law, see an IP lawyer who litigates, and be prepared for a long battle that will cost you a bundle.

While I cannot give you legal advice in this forum, as a general matter celebrities have certain rights of publicity/privacy which you may be violating. The laws vary from state to state. Here in California, a good place to start is to review California Civil Code Section 3344. Also, there can also be trademark rights associated with celebrities. In sum, you need to speak with a local IP attorney to help you work through this.

While the artist lost in Comedy III v Saderup, that is in CA and you are on the other side of the country, although in the 2nd Circuit, which has its law set mostly in NYC, also the home of celebrities who want protection. In the 2nd Circuit, you can expect the Court to look to the recent case of NCAA Football video games. Hart v. Electronic Arts, Inc., 2011 WL 4005350 (D.N.J. Sept. 9, 2011), where the Court explained that the transformative test, which has its origins in the fair use analysis of copyright law, looks to the extent that the likeness has been transformed by expressive changes or additions in the new work, or, in the words of the California Supreme Court, whether “the celebrity likeness is one of the ‘raw materials’ from which an original work is synthesized, or whether the depiction of the celebrity is the very sum and substance of the work in question.” Comedy III Productions, Inc. v. Gary Saderup, Inc., 25 Cal. 4th 387, 406 (2001). Reviewing recent cases applying the transformative use test, including to video games, the Court concluded that EA‘s use of plaintiff‘s likeness was sufficiently transformative to enjoy First Amendment protection. It appears that in your case the likeness of the celebrity is the sum and total of your picture, unlike the video game in the case noted, where there were many other likenesses and there was a football field, plays, scoreboards, stadiums, etc. I think you would lose this case in the Second Circuit based on the case law, so I think you need permission of the celebrities, each and every one of them. For a price you might even get permission if your sales volume is enough to interest the celebrity, if the celebrity likes your picture and if your shirts would not divert sales from other shirts licensed by or sold by the celebrity or the agents. licensees, heirs, merchandisers, or publishers of the celebrity. We can add you to the multitude of questioners on who want to freeride of celebrities, sports teams, famous companies, or others having a reputation. Do yourself a favor and see an entertainment lawyer or IP lawyer versed in first amendment issues and right of publicity issues who can help you through this "bramblebush" like a rabbit. To do that requires a thorough knowledge of the law in this area, which is in constant flux due to the competing issues of freedom of expression versus commercial expectations of celebrities and those who invest in celebrities, among whom we find many of the richest and most powerful people and some of the best attorneys who chase after celebrity money, just in a different way than you, one where their legal training and licensure allows them to do it legally.