The Naval Records Collection was begun in 1881 when the Chief of the Bureau of Navigation, John Grimes, started to collect records of Union and Confederate naval operations during the Civil War with a view to their eventual publication. In 1882 the Secretary of the Navy established the Navy Department Library in the newly created Office of Naval Intelligence. The first Librarian, James Russell Soley, then set about to acquire naval records from the various Navy departmental bureaus. In 1884 Soley assumed the work of collecting Civil War records that Grimes had begun. Also in 1884, the Congress appropriated funds for a special naval war records staff that was to be responsible for assembling and publishing documents that contained official information about the Union and Confederate navies. This naval war records staff and the Library operated under the Office of Naval Intelligence with a single head and as a single organization; it became known as the Office of Library and Naval War Records.
In 1894, the Office of Library and Naval War Records began publishing the Official Records of the Union and Confederate Navies in the War of the Rebellion (30 vols. Washington, 1894-1927). The first five volumes of this publication included the texts of only a few documents of Confederate origin. Most of the official records of the Confederate States Navy Department were destroyed by fire or pillage in 1865 in the Confederate War Department building in Richmond, Virginia. Some naval records were destroyed to prevent them from falling into Union hands; others were carried off by Confederate naval officers. Still others were among captured Confederate War Department records taken north to Washington. Because the Office of Library and Naval War Records had few Confederate documents in its holdings, it decided to assign a special agent to seek out and acquire records from private sources. In 1889 a former Confederate naval officer, Hardin B. Littlepage, was hired to contact other former Confederate naval officers, the Confederate Museum in Richmond, and other depositories and historical societies with holdings relating to the former Confederacy. Littlepage was successful in obtaining the donation and loan of documents relating to the Confederate States Navy. The documents thus acquired, in addition to being copied in the Official Records, were made a permanent part of the Naval Records Collection; many of them were later placed in the original Subject File of the U.S. Navy.
In 1889, the Office of Library and Naval War Records was placed directly under the Secretary of the Navy. At that time, the Office began to serve as a repository for naval records predating 1886 and soon became the major archival unit of the Navy Department. It acquired most of the bound records of the Secretary's Office and gradually added noncurrent records of other Navy bureaus to its collection. Legislation passed by the Congress in 1904 and 1906 aided this endeavor by requiring that all executive agencies transfer to the Navy Department naval records in their custody from the Revolutionary War to the Civil War. A 1915 act of the Congress consolidated the hitherto separate appropriations of the naval war records staff and the Library and changed the name of the organization to Office of Naval Records and Library. This title remained unchanged until August 1946 when the Office of Naval Records and Library was incorporated into the Office of Naval History, established in 1944. The latter was redesignated as the Naval History Division in 1952.
After World War I, the Office of Naval Records and Library continued to act as a custodian of old books, manuscripts, and other historical materials, but in addition it also became a collector of current records that could be used for contemporary and official research and for future historical research. This was partly due to the efforts of Force Commander, U.S. Naval Forces Operating in European Waters, Adm. William S. Sims, who recommended that the Navy Department establish a "Historical Section," modeled after the Historical Section of the British War Cabinet, to handle World War I naval records. In 1918 the Navy Department approved his suggestion and established a history section under the Chief of Naval Operations. The History Section was responsible for collecting and publishing World War I naval records, particularly those accumulated at Admiral Sims' London headquarters. Recognizing the common interests of the History Section and the Office of Naval Records and Library, the Secretary of the Navy combined the two offices in July 1919. As a part of this reorganization, the Office of Naval Records and Library was returned to the Office of Naval Intelligence under the Chief of Naval Operations. Despite the merger of the two offices, each continued to do its own work: the Office of Naval Records and Library handling the "old records" and the History Section handling the "current records."
In 1924, Commodore Dudley W. Knox, head of the Office of Naval Records and Library, ordered the establishment of a division of records (in the History Section), which was to be responsible for all the pre-World War I records. The Division of Records and the History Section lost their separate identities in 1927 when Knox reorganized the staff in order to begin a systematic arrangement of both the pre-World War I and the World War I records.
The Office of Naval Records and Library decided to arrange the pre-World War I records according to the same principles used to organize the World War I records of Admiral Sims' London headquarters. Examining and following the general principles of the British archive system for historical naval records, the History Section at London had selected individual documents for preservation rather than entire series and then gave the selected documents a new arrangement. As most of the documents concerned naval operations, an arrangement by geographical area according to the content or origin of a document was used to create an Area File for the World War I records collected at London. In the same manner, the Office of Naval Records and Library assembled the Area File of the U.S. Navy, 1775-1910, consisting of documents that related chiefly to events or conditions that I occurred in specific places on definite dates. The Office arranged the records chronologically under eight geographical areas. In 1963, NARA removed documents pertaining to the Confederate States Navy from the original file to form a separate Area File of the Confederate States Navy. Both the main Area File and Confederate Area File have been microfilmed by the NARA staff as Area File of the Naval Records Collection, 1775-1910, M625.