What was it? Gasoline? Diesel? Turbine jet? And when was it first made? I don’t count rockets as internal combustion engines.
Here’s a very interesting page: History of the internal combustion engine - Wikipedia
Probably not any of those things. Wasn’t gasoline developed to run in internal combustion engines? And didn’t Diesel work out an improvement, with some difficulty given the tools of the day, by getting such high pressures that an ignition system wasn’t needed? And fueled turbines came much later.
I’m going to say either gunpowder or gas (I mean methane or propane or something like that, not gasoline). I know such engines were built, and think no others preceeded them.
The one I would think of was the Lenoir engine. According to that wiki timeline, there were a few experimenters making prototypes before than. Lenoir probably made the first commercial engines in 1860. They ran on the “town gas” commonly used for municipal lighting in those days, produced from coal.
When petroleum was first commercially exploited in the 19th century, it was primarily to produce kerosene (or paraffin, to use the British term) for oil lamps. Other fractions were something that uses were found for later, including running ICEs.
You’ll note that the Otto cycle came along in the 1870s. I believe a lot of the early engines burned what we would characterize roughly as a naptha fraction - white gas or Coleman fuel, and it probably varied a lot. Petroleum refining became more sophisticated in parallel.
I heard that gasoline was an “unwanted” byproduct that came about when refining petroleum. It was only later that they found a viable use for it…
That is interesting, but they don’t go into much detail about the various engines. What is a compressionless engine? And that video on the Otto engines is awesome. You can see the camshaft and rockers.
And when I said gasoline engine, I really meant an engine based on the Otto cycle. It looks like it’ll be hard to declare an absolute first. Sir Samuel Morland may take it back in the 17th century, which is a hell of a lot earlier than I would’ve guessed, but I’d want to see how the engine worked before I declared it the winner.
I’d call it interesting, rather than awesome. I assume most people know the Otto cycle, but I think most of us are more familiar with the modern arrangement. Narration would have helped to point out the workings in the unfamiliar arrangement. Still cool, though. 
You heard wrong. ‘Virgin’ gasoline is a highly refined protect produced by distillation from crude oil, and the reformate that predominately makes up automobile gasoline is the product of blending a number of different distillates. Gasoline was originally used for gas ranges and lighting, as alcohol was originally preferred for early automotive IC engines, but the greater energy density, chemical stability, and temperature independence of gasoline demonstrated it to be a superior fuel.
To address the question of the o.p.: the Swiss inventor and engineer François Isaac de Rivaz is generally credited with building the first practical internal combustion engine on modern thermodynamic principles (i.e. accounting for adiabatic compression), albeit it never went into production as the material science of the day was insufficient to provide seals and bearings adequate for commercial use.
Stranger
It depends upon what you heard. I’ve heard this too. The claim isn’t that someone was making “pure” hexane=heptane-octane gasoline and tossing it out, but that in the early days of Drake’s well and the like the “lighter fractions” of the petroleum , which were dangerously volatile, were discarded as a hazard.