The nation's highest military honor, the Medal of Honor, was authorized by Congress in a country torn by the Civil War. On December 9, 1861, at the request of the Secretary of the Navy, Senator James Wilson Grimes of Iowa introduced a bill to create a medal for the US Navy. It was intended to promote efficiency by recognizing enlisted personnel who distinguish themselves by their gallantry in action and other seamanlike qualities. The bill passed and President Lincoln signed it into law on December 21, 1861. The Navy would not recognize the acts of its officers until 1915.

The Army requested similar legislation two months later. Sponsored by Senator Henry Wilson of Massachusetts, the legislation became law on July 4, 1862. A year later the Army broadened the eligibility to include officers.

By the early 1900s military leaders wished to acknowledge soldiers for performing lesser deeds while maintaining the special prestige attached to the Medal of Honor. To solve this problem, the military developed a "Pyramid of Honor" consisting of different levels of recognition such as the distinguished service cross and silver star. The Medal of Honor stood at the top of the pyramid. Iowa-born and Medal of Honor recipient, Major William Birkhimer, offered an idea for providing further recognition for medal recipients. He proposed that "every possible attention should be paid to formality and solemnity of circumstance" when awarding the medal. Medals were usually mailed to the honoree. Thus, in 1905, President Theodore Roosevelt signed an executive order directing that a presentation "will always be made with formal and impressive ceremonial" and that the recipient be ordered, when possible, to Washington, D.C. for the ceremony.

Fewer than 3,500 medals have been presented, more than half issued posthumously. Each medal is engraved with the name of the recipient.