The first mention of a possible Order of Merit was made following the Battle of Trafalgar in 1805, in correspondence between First Lord of the Admiralty Lord Barham and William Pitt, though nothing came of the idea. Later, it was thought by Queen Victoria, her courtiers, and politicians alike, that a new order, based on the Prussian order Pour le Mérite, would make up for the insufficient recognition offered by the established honours system to achievement outside of public service, in fields such as art, music, literature, industry, and science.
Victoria's husband, Albert, Prince Consort, took an interest in the matter; it was recorded in his diary that he met on 16 January 1844 with Robert Peel to discuss the "idea of institution of a civil Order of Merit" and, three days later, he conferred with the Queen on the subject. The concept did not wither and, on 5 January 1888, British prime minister Lord Salisbury submitted to the Queen a draft constitution for an Order of Merit in Science and Art, consisting of one grade split into two branches of knighthood: the Order of Scientific Merit for Knights of Merit in Science, with the post-nominal letters KMS, and the Order of Artistic Merit for Knights of Merit in Art, with the post-nominal letters KMA. However, Sir Frederic Leighton, President of the Royal Academy, advised against the new order, primarily because of its selection process.
Victoria's son, King Edward VII, eventually founded the Order of Merit on 26 June 1902 (the date for which his coronation had been originally planned) as a means to acknowledge "exceptionally meritorious service in Our Navy and Our Army, or who may have rendered exceptionally meritorious service towards the advancement of Art, Literature and Science". All modern aspects of the order were established under his direction, including the division for military figures.
From the outset, prime ministers attempted to propose candidates or lobbied to influence the monarch's decision on appointments, but the Royal Household adamantly guarded information about potential names. After 1931, when the Statute of Westminster came into being and the Dominions of the British Empire became independent countries, equal in status to the UK, the Order of Merit continued as an honour open to all these realms and, in many, became a part of their national honours systems. The order's statutes were amended in 1935 to include members of the Royal Air Force and, in 1969, the definition of honorary recipients was expanded to include members of the Commonwealth of Nations that are not realms.
From its inception, the order has been open to women, Florence Nightingale being the first woman to receive the honour, in 1907. Several individuals have refused admission into the Order of Merit, such as Rudyard Kipling, A. E. Housman, and George Bernard Shaw. To date, Prince Philip, Duke of Edinburgh, remains the youngest person ever inducted into the Order of Merit, having been admitted by Queen Elizabeth II in 1968, when he was 47 years of age.