The Indian Department was established in 1755 to oversee relations between the British Empire and the First Nations of North America. The imperial government ceded control of the Indian Department to the Province of Canada in 1860, thus setting the stage for the development of the present-day Department of Crown–Indigenous Relations and Northern Affairs Canada.

During its existence, the Indian Department served both a diplomatic and a military role. Its daily responsibilities were largely civil in nature, such as the administration of justice, the management of the fur trade, and the employment of blacksmiths, teachers, and missionaries. At the same time, the Department was expected to mobilize and lead Indigenous warriors in times of crisis and conflict.

Theoretically, control over the Indian Department rested with the senior-most administrator in British America, initially the Commander-in-Chief of the British forces in North America, and later the Governor General of the Canadas. In practice, Indian Affairs were managed by the senior officers of the Indian Department themselves, upon whose advice the Governors General depended.

During the period 1755–1830, the mission of the Indian Department can be summarized as protecting the indigenous peoples from exploitation by traders and land speculators (one of the goals of the Royal Proclamation of 1763; negotiations with the First Nations about boundaries between their land and that of the agricultural colonists (such as the Treaty of Fort Stanwix 1768); distribute the gifts that the government gave to the indigenous people in order to create goodwill. First Nations who lived on American territory in the Midwest received gifts until 1830; in war, induce First Nations to support Britain with auxiliary troops (during the War of 1812, the Department acted in close cooperation with Chief Tecumseh).

During the period 1830–1860, the Department's major mission was to administrate the Indian Reserves.

During the period 1755–1796 the Commander-in-Chief, North America issued instructions for the Indian Department and maintained close connections with it. Yet, the Department was not directly subordinated to him, but to the Home Office in London. In 1796, the Indian Department of Upper Canada became subordinated to the Lieutenant Governor of that province, while in 1800, the Governor General became responsible for the Department in Lower Canada. In 1816, the Indian Department in both Canadas was subordinated to the British commander-in-chief. The Department was again in 1830 divided into two departments; one in Upper Canada under the Lieutenant Governor, one in Lower Canada under the Military Secretary to the Governor General. The two departments were again merged and coming under the Governor General in 1840.

In 1755, there were two departments, the Northern Department and the Southern Department; each having its own superintendent. The boundary between them ran along the Ohio River and the Potomac. During the American Revolutionary War, the Southern Department was divided into two; one in the west and one in the east. In 1782 the departments received a common superintendent. After the Treaty of Paris of 1783, the area of responsibility became limited to Canada and the departments were formally merged into one organization. The office of superintendent was abolished in 1844 and the direct leadership was taken over ex officio by the Civil Secretary to the Governor-General.

Before 1755, responsibility for maintaining diplomatic relations with the Indigenous nations of North America rested with the individual British colonies. It was only the outbreak of the Seven Years' War that impelled the British Empire to centralize the management of Indian Affairs. Accordingly, Sir William Johnson was granted a special commission as Superintendent of Indian Affairs in 1755 in order to mobilize allied Indigenous warriors in the struggle against New France, and to win over or neutralize the Indigenous allies of the French.