Homunculus by James P. Blaylock (1986)
When K.W. Jeter was digging for a term to describe the genre, he specifically mentioned the books of Tim Powers and James P. Blaylock, who wrote the steampunk classic Homunculus. It definitely can be a bit slow at times in terms of pace, and thus might not turn out to be for everyone, but is an important work of the genre nonetheless. Powers, Jeter, and Blaylock really form the triumvirate of the first real wave of steampunk in the 1980s, so they are indispensable in understanding the genre.