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public Cursor createCustomCursor(Image cursor, Point hotSpot, String name)
            throws IndexOutOfBoundsException

        Toolkit tk = panel.getToolkit();

    Cursor cursor = tk.createCustomCursor(img, hotSpot, name);

     panel.setCursor(cursor);

import java.awt.*;
import java.applet.*;
public class CursorApplet extends Applet {
    public void init() {
        //load the image with the Media Tracker
        MediaTracker tracker = new MediaTracker(this);
        Image cursor = getImage(getCodeBase(), "music_note.gif");
        tracker.addImage(cursor, 0);
        try {
            tracker.waitForID(0);
        } catch (InterruptedException ie) {
            ie.printStackTrace();
        }
        Cursor cr = null;
        //get the toolkit for this environment
        Toolkit tk = getToolkit();
        try
            //this is the x,y coordinates of the image which
            //will actually do the "clicking"
            Point hotSpot = new Point(1, 1);
            //create the custom cursor
            cr = tk.createCustomCursor(cursor, hotSpot, "music_note");
        } catch (IndexOutOfBoundsException e) {
            e.printStackTrace();
        }
        //set the cursor for this applet component
        setCursor(cr);
    }
}