With the initiation of planned development process, a planning agency by the name of Planning Commission was constituted for the first time in Nepal in 1956 under the Chairmanship of the Prime Minister. To make it more capable and effective, The Yojana Mandal (a planning body) was set up the same year in accordance with the Yojana Mandal Act, 1957. Besides the responsibility of plan formulation, the Yojana Mandal was entrusted with various executive powers. Following the overthrow of the multiparty democratic system in 1960 and with the initiation of Panchyat political system thereafter, Rastriya Yojana Parishad (National Planning Council) under the Chairmanship of His Majesty late King Mahendra was constituted. As the decisions of the Council were treated as equivalent to that of the cabinet, the Council was regarded as the highest authority in the sphere of economic planning and policies. In the beginning, a separate Secretariat was set up to serve the Council. However, with the creation of the Ministry of Economic Affairs in 1962, the Ministry itself carried out the functions of the Secretariat. Various activities relating to development budget and foreign aid were directly brought under the purview of the National Planning Council.

In 1963, the National Planning Council was dissolved and a new central planning body, with an identical name, was constituted under the Chairmanship of the Chairman of the Council of Ministers. All the Ministers were designated as Ex-officio members and the Ministry of Economic Affairs was renamed as the Ministry of Planning.

In 1968, all the works related to development budget and foreign aid hitherto carried out by the Ministry of Economic Planning were assigned to the Ministry of Finance. The National Planning Council under the Chairmanship of the Chairman of Council of Ministers was replaced by the National Planning Commission, under the Chairmanship of the Prime Minister, and a separate Secretariat was set up to serve it. A comprehensive study on the functions and responsibilities of the central planning agency resulted in the preparation of the report in 1972 and the National Planning Commission was reconstituted accordingly.

Planning activities were carried on in accordance with the Report on Central Planning Agency, 1972. In 1987, some minor changes were introduced in the structure of National Planning Commission. With the restoration of democracy, following the people's movement of 1990 and the establishment of constitutional Monarchy in the country, some changes were made in the structure and organization of National Planning Commission in 1991. The reconstituted Commission was headed by the Prime Minister and consisted of a full time Vice-Chairman and five Members and a Member-Secretary. The Chief Secretary and the Finance Secretary were included as the Ex-officio Members.