The use of administrative agencies in the United States dates from 1789, when legislation first provided for the administration of customs laws, regulation of oceangoing vessels, and payment of pensions to veterans. But it was in the late 19th cent., with the growth of public transportation and public utilities, that agencies began to play a major role in American life. Passage of the Interstate Commerce Act and establishment of the Interstate Commerce Commission in 1887 mark the start of modern administrative law in the United States.

Over time, and especially during the New Deal, with the growth of the nation and its government, federal agencies have assumed legislative and quasijudicial functions—rulemaking, adjudication, investigation, supervision, and prosecution—which neither Congress nor the courts could effectively handle. The traditional notion of the separation of powers has thus been blurred. The principle that Congress cannot delegate its legislative powers has been circumvented by having Congress set primary standards and allowing agencies to fill in the gaps. As a result of their proliferation and the growth of their powers, agencies have come to affect activities ranging from collective bargaining to arms control.

In reaction to the great expansion of agency activity, the Federal Register Act of 1935 required the recording of executive agency actions and procedures in the Federal Register, and the collection of this body of "law" in the Code of Federal Regulations began. The Federal Administrative Procedure Act (1946) provided uniform standards of procedure. The APA guarantees the right of judicial review to any person "suffering legal wrong because of any agency action"; in general, administrative actions will be set aside only for abuse of discretion. Under European legal codes, special administrative courts review the actions of administrative agencies; in common law systems, on the other hand, ordinary courts have complete jurisdiction over controversies involving the validity of agency action.