The Reichstag (German: [ˈʁaɪçstaːk] ^ⓘ) of the North German Confederation was the federal state's lower house of parliament. The popularly elected Reichstag was responsible for federal legislation together with the Bundesrat, the upper house whose members were appointed by the governments of the individual states to represent their interests. Executive power lay with the Bundesrat and the king of Prussia acting as Bundespräsidium, or head of state. The Reichstag debated and approved or rejected taxes and expenditures and could propose laws in its own right. To become effective, all laws required the approval of both the Bundesrat and the Reichstag. Voting rights in Reichstag elections were advanced for the time, granting universal, equal, and secret suffrage to men above the age of 25.

When the German Empire was established in 1871, the North German Reichstag formed the basis of the new Reichstag of the German Empire.

Following Prussia's victory in the 1866 Austro-Prussian War, Otto von Bismarck, who was then minister president of Prussia, prepared a draft constitution for the North German Confederation in which the Reichstag was to form the representative body of the people. It was to take its place alongside the monarchical-federal executive power of the Bundesrat and the Bundespräsidium – the head of state in the person of the king of Prussia, William I. The Reichstag was to be given the powers of a popular legislative body customary for the era and was meant to counterbalance both monarchical influences and the particularism of the 22 states that made up the Confederation. Equally important for Bismarck was integrating the liberal-national movement into the Reichstag. Unlike the parliaments of the individual German states, it was to be elected by universal, equal, and secret manhood suffrage rather than by class or census suffrage, under which votes were weighted differently based on income, rank in society, and other qualifications. The voting age was twenty-six. Although the Reichstag was weaker than the other federal bodies, it was not marginalized in the drafting of the constitution.

Bismarck's stipulation that there be no pay for deputies was directed primarily against the election of workers' representatives, who would find it financially difficult to run for office. It was also intended to separate Reichstag membership from public employment, which meant that the many civil servants in state parliaments and the other public servants who formed a core part of Germany's liberal movement would be excluded.

On 12 February 1867 a constituent Reichstag was elected on the basis of universal manhood suffrage to deliberate on the proposed constitution. The territory of the North German Confederation was divided into 297 electoral districts, in each of which one deputy was directly elected by majority vote. If no candidate achieved an absolute majority in the first round of voting, a runoff election was held between the top two candidates. In spite of considerable criticism of the North German Confederation, especially in the territories annexed by Prussia at the end of the Austro-Prussian War, there was no boycott of the elections. The overall voter turnout of almost 65% was significantly higher than in the elections to the Prussian state parliaments. Although the government tried to influence the elections, the results largely reflected the political sentiments of the population and differed little from those of the state parliaments. The majority in the constituent Reichstag was made up of the National Liberal Party (which had just split from the German Progress Party), the moderate-conservative Free Conservative Party and a few other liberal-minded deputies who joined with them. Together they accounted for 180 of the 297 seats and were those deputies who would potentially support Bismarck's policies. Opposite them stood 63 deputies from the Conservative Party, 13 who were Polish-speaking, 18 German-Hanoverians and other particularists, and 19 deputies from the German Progress Party. The anti-Prussian Saxon People's Party was represented by the two later Social Democratic parliamentarians August Bebel and Reinhold Schraps.

The president of the Reichstag was Eduard von Simson, who had held the position in the Frankfurt National Assembly in 1848–1849 and would hold it again in the Reichstag of the German Empire from 1871 to 1874. August Bebel later wrote in his memoirs that "the elite of North German politicians and parliamentary luminaries" had been assembled in the parliament. "The time of ideals is over," he concluded. "German unity has descended from a dream world into the prosaic world of reality. Politicians today have less than ever to ask what is desirable than what is achievable."

The constitutional deliberations took place largely within the parliament itself. In contrast to the Frankfurt National Assembly, there were few petitions or attempts to exert influence from the outside. Bismarck had reserved the right to impose a constitution in the event that too many changes were made to his draft. With that threat in the background, he was usually able to prevail in cases of conflict. The constitution included no catalog of fundamental rights, due in part to different formulations by the individual states. Bismarck also wanted to avoid ideological conflicts of principle, such as over the position in the state of the church or family. He nevertheless had to accept some compromises. He did not, for example, succeed in making the Reichstag president a "federal monarch".

The liberals failed in their demand that the heads of the federal ministries be responsible to parliament for their governmental acts. Rudolf von Bennigsen, leader of the National Liberal parliamentary group, then introduced language that came to be known as the "Lex Bennigsen". It made the chancellor responsible for the acts of the Bundespräsidium and took its place as part of Article 17 of the constitution: