Initially it was established as General Directorate of Construction in the Far North (Главное Управление строительства Дальнего Севера) under the Ministry of Internal Affairs of the Soviet Union.

[6] Dalstroy authorities chose civilians employed as labor force, but faced with the harsh climate, with long winters and extremely low temperatures, working conditions were brutal from the onset.

After the organization was placed under the NKVD in 1938, prisoners from various forced labor camps (ITL - Исправительно-трудовой лагерь) of the USSR were used as miners, as well as for the building of the infrastructure that the region lacked.

Since the area was chosen as a harbor for future operations, a plan for the establishment of an East Even Cultural Base (Восточно-Эвенская культбаза) was carried out.

Construction began in 1929 in order to settle and re-educate the local population and to educate the younger generation in line with the Soviet Cultural Revolution.

However, there was resistance from the part of the native population to the system of cooperatives, district committees and to have their children educated at the school of the cultural base.

[10][page needed] In his book Red Arctic, John McCannon explains how Dalstroy initially relied on Glavsevmorput or GUSMP (Russian acronym for Main Administration of the Northern Sea Route, a Soviet agency for exploiting resources across the far north) for coordination of supplies and transport.

Over the years, however, as Dalstroy grew more powerful, its director Eduard Berzin obtained ships of his own so as[citation needed] to have more freedom of action.

In November 1948, under pressure from the Ministry of Non-Ferrous Metallurgy, Dalstroy played a pioneering role in the reform of the Soviet forced labour system.