Congress created the former Court of Claims to safeguard the financial stability of the government by not permitting a multitude of claims to deplete the public treasury. Traditionally, persons whose rights were violated by the federal government could seek congressional enactment of a private bill authorizing a payment of money to compensate for the loss. Private bills were addressed to the conscience of the government and, therefore, their passage depended on political factors.

Inconsistencies in the passage of private bills and an increase in their number put pressure on legislators and caused serious delay in the completion of the legislative agenda. To ameliorate the situation, Congress enacted a law in 1855 creating the Court of Claims, which was empowered to hear claims against the government and report its findings to Congress along with proposals for solving the problem in each case.

Initially, the Court of Claims could hear only claims and determine whether they had merit. By the end of 1861, Congress was still overburdened by the need to review claims that had already been considered by the Court of Claims. President Abraham Lincoln recommended that judgments made by the Court of Claims be considered final without any further action on the part of Congress. In 1863, Congress accepted the suggestion. The decisions of the Court of Claims were made final with no further action by Congress necessary to give them effect. Appeals, when permitted, were made directly to the Supreme Court.

In 1982, the Federal Courts Improvement Act (28 U.S.C.A. § 1 et seq.) established the United States Claims Court, a trial court that inherited almost all the trial jurisdiction of the former Court of Claims. The court's name was changed to United States Court of Federal Claims by the Federal Courts Administration Act of 1992 (106 Stat. 4516 [28 U.S.C.A. § 1 note]). The court hears lawsuits against the United States based on the Constitution, federal laws, or contracts, or for damages in actions other than torts. It also has jurisdiction to determine cases concerning the salaries of public officers or agents, damages for someone who was unjustly convicted of a federal crime and imprisoned, and some American Indian claims. The Court of Appeals for the Federal Circuit has appellate jurisdiction regarding Court of Federal Claims decisions.

The court's jurisdiction is nationwide. Trials are conducted at locations that are most convenient and least expensive to taxpayers.