After discussions extending over several years, the Norwegian Evangelical Lutheran Church in America decided on October 10, 1857, to found a college and began to gather subscriptions for a building fund. In the same year it also decided that, until such time as suitable buildings could be erected, students should be sent to Concordia College and Seminary in St. Louis, and that a Norwegian professorship should be established there. The first three students went to St. Louis in 1858 and five more followed the next year. The Norwegian professorship was filled in 1859, when Rev. Laur. Larsen was appointed, entering officially upon his duties October 14, 1859. Hence October 14 was designated as Founders' Day by the college.

With the outbreak of the Civil War, disorders arose in St. Louis. Concordia College and Seminary closed in April, 1861, and Professor Larsen and students returned home. At its meeting in June 1861, the church decided to proceed at once to establish its own college. In August, although a building in Decorah had been rented and partially renovated, college authorities decided to make use of a newly erected vacant parsonage at Halfway Creek, Wis., about 13 miles north of La Crosse. There the school opened September 1, 1861, with two teachers, Laur. Larsen and F. A. Schmidt. Larsen and Schmidt also served as pastors for the immigrants then living in the area. The enrollment for the year was 16.

In the summer of 1862 the school was transferred to Decorah; its first home was the building, still standing, at the northwest corner of Winnebago and Main streets. The first building on the college campus was "Main," dedicated October 14, 1865. The present Main building is the third "Main" to stand on the same site, the two preceding having been destroyed by fire in 1889 and 1942. Though college work was begun in 1861, the Civil War, illness, and other causes left none of that year's freshman class to graduate in 1865. The first graduating class, therefore, was that of 1866.

The classical curriculum established by the founders of the college was changed in 1932 when the requirement that all students take both Greek and Latin was dropped.

For 75 years the school admitted men only; then in 1936 Luther College became coeducational. When the institution celebrated its centennial in 1961, it had an enrollment of 1,357 and a staff of 74 full-time and 12 part-time teachers.

Expansion has marked the college's second century, and when Luther celebrated its sesquicentennial in 2011, there were 2,500 students and 180 full-time faculty. The college has grown physically as well with an extensive building program that began in the 1960's.

Luther has also expanded its academic program to include the professional areas of nursing and social work, several preprofessional programs, and a robust study abroad program—all grounded in the college's commitment to the liberal arts.