NORAD was established in 1968. From 1984 the administration of development co-operation was in the hands of the Ministry of Development Co-operation. With effect from 1990, NORAD was made an independent directorate under the Ministry of Foreign Affairs.

Norad's most important task is to contribute in the international cooperation to fight poverty. From February 2004 Norad was reorganised. Norad aims to contribute to effective management of development funds and ensure that the Norwegian development cooperation has high quality and is evaluated.

The purpose of Norwegian development cooperation is to contribute towards lasting improvements in economic, social and political conditions for the populations of developing countries, with particular emphasis on ensuring that development aid benefits the poorest people. The objective of cultural cooperation is to assist developing countries in strengthening their own cultural identity and to promote broad popular participation in the development process through cultural expression. Cultural cooperation is also intended to create broad insight into and mutual respect between cultures.

The Directorate's staff numbers some 220 in Norway and about 80 abroad, at 15 missions in developing countries. In certain African countries and in Pakistan, India and Guatemala, the NORAD missions have been integrated with the embassies.