The Delhi School of Economics (DSE) was established in 1949 as an institution for advanced studies and research in Economics and allied disciplines at the initiative of Professor V.K.R.V. Rao. In 1952, a formal registered body under the name of Delhi School of Economics Society was formed and the Delhi School of Economics became one of its components.

The DSE Society constituted a Governing Body for the administration of the School. The School had thereafter a mixed status, functioning both as the University Department of Economics and Commerce and as an Institute of national and international importance. Its funds came both from the University budget and from the Society's fundraising efforts.

In 1956, the School moved into its new building, constructed using private donations and assistance from the University Grants Commission. In 1959, the University established the Departments of Sociology and Human Geography as part of the School. A separate Department of Commerce was added in 1967, later becoming part of the Faculty of Commerce and Business Studies in 1993.

The departments of Economics and Sociology at the Delhi School of Economics have been recognized by the University Grants Commission (UGC) as Centers for Advanced Studies. The administration of the School is overseen by a Director, appointed by the Vice Chancellor from among senior professors of the Economics, Sociology, and Geography departments.

The Ratan Tata Trust generously supported the Library at DSE, contributing Rs. One Lakh initially, which led to the naming of the Ratan Tata Library. In 1980, an additional grant of Rs. 2 Lakhs was given for the construction of an annex to the Library, completed in 1986 at a cost of Rs. 6 Lakhs. The Library became part of the University of Delhi system in 1957 when DSE ceased to be an autonomous institution.