  We investigate the coupled formation and evolution of galaxies and their
embedded supermassive black holes using state-of-the-art hydrodynamic
simulations of cosmological structure formation. For the first time, we
self-consistently follow the dark matter dynamics, radiative gas cooling, star
formation, as well as black hole growth and associated feedback processes,
starting directly from initial conditions appropriate for the LambdaCDM
cosmology. Our modeling of the black hole physics is based on an approach we
have developed in simulations of isolated galaxy mergers. Here we examine: (i)
the predicted global history of black hole mass assembly (ii) the evolution of
the local black hole-host mass correlations and (iii) the conditions that allow
rapid growth of the first quasars, and the properties of their hosts and
descendants today. We find a total black hole mass density in good agreement
with observational estimates. The black hole accretion rate density peaks at
lower redshift and evolves more strongly at high redshift than the star
formation rate density, but the ratio of black hole to stellar mass densities
shows only a moderate evolution at low redshifts. We find strong correlations
between black hole masses and properties of the stellar systems, agreeing well
with the measured local M_BH-sigma and M_BH -M_* relationships, but also
suggesting (dependent on the mass range) a weak evolution with redshift in the
normalization and the slope. Our simulations also produce massive black holes
at high redshift, due to extended periods of exponential growth in regions that
collapse early and exhibit strong gas inflows. These first supermassive BH
systems however are not necessarily the most massive ones today, since they are
often overtaken in growth by quasars that form later. (abridged)
