As was characteristic of government departments in the Nazi era, the Ministry was personality-driven and formal procedures were often ignored in favour of the whims of the Minister, Reichsmarschall Hermann Göring.

The Ministry was formed on 27 April 1933 from the Reich Commissariat for Aviation (German: Reichskommissariat für die Luftfahrt), which had been established two months earlier with Göring at its head.

Defence Minister General Werner von Blomberg decided that the importance of aviation was such that it should no longer be subordinate to the German Army (Heer).

Erhard Milch, the former head of Deutsche Luft Hansa, was placed in direct control of the LA, in his function as Secretary of State for Aviation.

The result was a collection of six: Luftkommandoamt (LA), Allgemeines Luftamt (LB), Technisches Amt (LC, but more often referred to as the C-amt) in charge of all research and development, but having no clear way of receiving and acting on requests from front-line combat personnel of the Luftwaffe during the war years, to improve their aviation and weapons technology as a "technical-tactical" department would do in other nations' military aviation bureaus, the Luftwaffenverwaltungsamt (LD) for construction, Luftwaffenpersonalamt (LP) for training and staffing, and the Zentralabteilung (ZA), central command.

With the rapid growth of the Luftwaffe following the outbreak of World War II in 1939, the Ministry grew so large that Göring was no longer able to maintain control.

The RLM never overcame the shortage of raw materials and fuel supply, lack of experienced pilots and deficits in technology and know-how that had handicapped it since the beginning of the war.

Also extending from the wreath towards the four corners of the flag were four black-edged white inactive wedges, a feature that was to be incorporated in the design of the future unit Colours of the new Luftwaffe.

When Göring was promoted to "Generalfeldmarschall" a pair of Luftwaffe field marshal's batons were added to the flag's reverse design and shown crossed above the "Pour le Mérite".