Well, this isn’t necessarily good news.
Two students at Johns Hopkins University took a look into the Mac’s webcam indicator light and were able to find a way to disable the green light. The hack they mentioned doesn’t work on models built after 2008, but they do say that it’s entirely possible that such a hack exists on newer computers.
Here’s a portion of their paper:
Abstract—The ubiquitous webcam indicator LED is an im- portant privacy feature which provides a visual cue that the camera is turned on. We describe how to disable the LED on a class of Apple internal iSight webcams used in some versions of MacBook laptops and iMac desktops. This enables video to be captured without any visual indication to the user and can be accomplished entirely in user space by an unprivileged (non- root) application.
According to MacRumors, aside from not allowing untrusted people to access your computer or downloading strange apps, all you can do is cover the camera.