In 1921, Frederic G. Melcher first proposed the idea of an award to recognize children’s literature at the annual meeting of the Children's Librarians' Section (now known as the Association for Library Service to Children) of the American Library Association (ALA). The purpose of the award would be: “To encourage original creative work in the field of books for children. To emphasize to the public that contributions to the literature for children deserve similar recognition to poetry, plays, or novels. To give those librarians, who make it their life work to serve children's reading interests, an opportunity to encourage good writing in this field” (Parravano 1999). The emergence of the children’s publishing industry, the growth of children’s librarianship and the appearance of critical reviews of children’s literature magazines all influenced Melcher’s desicion to create this award. He saw it as a means to encourage the publication and dissemination of quality books for children. Members of the ALA enthusiastically supported Melcher’s proposal, and it received the approval of the executive board in 1922. The first award went to Hendrik Willem van Loon for his book, The Story of Mankind.

The award is named for John Newbery, a British children’s book publisher from the 18th Century. Known as one of the earliest publishers of books specifically for children, Newbery also recognized that children’s books should be entertaining, as well as instructional. Many of the books for children from this time period tended to be overly didactic and religious. Newbery led the way to a shift in children’s publishing, and some have said that he opened the floodgates of children’s books. Melcher, like Newbery, made children’s books a central part of his life. Together with Franklin K. Mathiews, chief librarian of the Boy Scouts, and Anne Carroll Moore, an influential children’s librarian, he established the first Children’s Book Week in 1919, which is still celebrated today. He also was co-editor of the magazine, Publisher’s Weekly for forty years and served as president of R.R. Bowker Publishing Company for twenty-six years.

The Newbery Medal, the first children’s book award in the world, remains the most influential and well known of all children’s book awards. It has not escaped criticism, however. Some have argued that it is overly biased towards fiction. Others have stated that the books chosen are popular with adults, but not widely popular with children. Some have also commented on the lack of ethnic diversity in both authorship and characters among Newbery winners, but this might be due to the small number published of these types of books, as much as other factors. Regardless of its criticisms, the Newbery remains a strong influence in the world of children’s book publishing. With the consolidation of children’s publishing houses and the decrease in funding for school and public libraries, the Newbery plays a vital role in promoting books that might otherwise be “lost” to the public and to history.