The office was first created in October 1786, before the arrival of the First Fleet, to act as a deputy to the first governor, Arthur Phillip.

Since 1872 this office has been held concurrently by the chief justice of New South Wales but the position may be retained by the chief justice after their retirement from the Supreme Court of New South Wales.

Originally, the lieutenant-governor had a legislative role with a seat on the first Legislative Council of New South Wales in 1824; this was later phased out due to the lessening of the powers of the state governor.

The role of the governors are enshrined in part 2A of the New South Wales Constitution Act (1902).

The office itself has no standing powers but holds a dormant commission to act in the governor's position when needed.