[1] The academy was inaugurated on 15 October 1956, by Chithira Thirunal Balarama Varma, the former king of Travancore, in Thiruvananthapuram.

The academy recognises superior literary works through its annual literary awards for Poetry, Novel, Story, Drama, Literary criticism, Biography – autobiography, Travelogue, Humour, Translation, Children's literature etc.. As of 2016[update] the academy is headed by Malayalam short story writer Vaisakhan, who is serving as its president, Khadija Mumtaz as its vice president, and K P Mohanan as its secretary.

The Akademi also holds periodic book festivals to encourage reading among the masses.

The Akademi regularly publishes three journals Sahithyalokam, Sahithya Chakravalam and Malayalam Literary Survey (in English).

Besides the Kerala Sahitya Akademi Award, the Akademi awards the illustrious Ezhuthachan Puraskaram, which is named after the father of Malayalam literature Thunchaththu Ezhuthachan, yearly to prominent literary figures.