From The New York Times:
A bottlenose dolphin wearing a marine basket sponge in Shark Bay.
By SINDYA N. BHANOO
In the 1980s it was discovered that some bottlenose dolphins in Shark Bay, Australia rip up marine basket sponges from the seafloor and place them on their noses for protection as they forage for food along rocky substrate. It is the only known instance of tool use by dolphins in the wild.
Curiously, only 54 dolphins in Shark Bay use marine sponges as tools. All are female, and some pass the skill to their daughters.
When the tool use was first discovered 26 years ago, there were five dolphins that exhibited the behavior. One of those females has since died, but the other four continue to use marine sponges, Dr. Mann said.