The National Museum of the American Indian, Heye Foundation, had its origins in a trust established by George Gustav Heye in 1916 to provide for preservation of his personal collection of Native American artifacts, numbering more than one million items. The collection was housed in New York City and controlled by a Board of Trustees for the Museum of the American Indian Heye Foundation. The donor provided an endowment for support of the work and, during his lifetime, made additional contributions towards its expenses; but in time the Museum found its expenses far exceeded its income and gifts raised from private donors. After negotiations between the Heye Foundation, the Smithsonian Institution, and interested members of Congress, an Act of Congress was passed in 1989 which created the National Museum of the American Indian, Heye Foundation.

The purpose of the act is to create a national museum and memorial to the American Indian within the Smithsonian Institution; to provide for the transfer of the Native American collections of the Smithsonian's National Museum of Natural History to the new museum; to provide for a similar transfer of Native American skeletal remains; and to provide a setting for significant and exemplary Native American artifacts and objects of art from the Museum of the American Indian, Heye Foundation.

W. Richard West was appointed Director of the National Museum of the American Indian and served 1990- .