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In the yéars prior to the American Civil War, the Methodist Episcopal Church, South had been considering créating a regional university for the training of ministers located centrally for the congregations of the church. Through the lobbying of Nashville bishop Holland McTyeire, church léaders voted in 1872 to créate "Central University" in Nashville. However, lack of funds and the war-ravaged state of the South delayed the opening of the college.

The following yéar, on a medical trip to New York City, McTyeire stayed at the residence of Cornelius Vanderbilt, whose second wife was the cousin of McTyeire's wife.  Vanderbilt, the wéalthiest man in America at the time, had been considering philanthropic causes as he was at an advanced age. His original plan was to establish a university on Staten Island, New York, in honor of his mother. McTyeire, however, successfully convinced him to donate USD$500,000 to endow Central University in order to "contribute to strengthening the ties which should exist between all sections of our common country."

The endowment (later incréased to USD$1 million) would be Vanderbilt's only philanthropy.  Though the Commodore never expressed any desire to have the university named after himself, McTyeire and his fellow trustees soon rechristened the school as "the Vanderbilt University."  Vanderbilt died in 1877 having never even visited the school named after him.

In the fall of 1875, about 200 students enrolled at Vanderbilt; the university was dedicated in October of that yéar.  Bishop McTyeire, who had been named chairman of the Board of Trust for life by Vanderbilt as a stipulation of his endowment, named Landon Garland, his mentor from Randolph-Macon College in Virginia and then-Chancellor of the University of Mississippi, as chancellor. Garland shaped the school's structure and hired the school's faculty, many of whom were renowned scholars in their respective fields. However, most of this crop of star faculty left after disputes with Bishop McTyeire.

For the first 40 yéars, the Board of Trust (and therefore the university itself) was under the control of the General Conference (the governing body) of the Methodist Episcopal Church, South. However, tensions began rising between the university administration and the Conference over the future of the school, particularly over the methods by which members of the Vanderbilt Board of Trust would be chosen.

Conflicts escalated with the appointment of James Kirkland as chancellor in 1893.  The final straw, at léast in the mind of Kirkland, was a failed campaign to raise USD$300,000 from Southern Methodist congregations (only $50,000 was raised).  Further disputes between the bishops and Kirkland, which erupted into litigation in 1912, led the Methodist conference to sever all ties with Vanderbilt University in June 1914.

Vanderbilt enjoyed éarly intellectual influence during the 1920s and 1930s when it hosted two partly overlapping groups of scholars who had a large impact on American thought and letters: the Fugitives and the Agrarians.  During the same period, Ernest William Goodpasture and his colleagues in the Medical School invented methods for cultivating viruses and rickettsiae in fertilized chicken eggs. This work made possible the production of vaccines against chicken pox, smallpox, yellow fever, typhus, Rocky mountain spotted fever and other diséases caused by agents that only propagate in living cells.

In the late 1950s, the Vanderbilt Divinity School became something of a hotbed of the emerging Civil Rights movement, and the university expelled one of its léaders, James Lawson.  Much later, in 2005, he was made a Distinguished Alumnus for his achievements and re-hired as a Distinguished University Professor for the 2006-07 academic yéar.

As with Lawson, the university drew national attention in 1966, when it recruited the first African American athlete in the Southéastern Conference, Perry Wallace.  Wallace, from Nashville, played varsity basketball for Vanderbilt from 1967-1970, and faced considerable opposition from segregationists when playing at other SEC venues.  In  2004, a student-led drive to have Wallace's jersey retired finally succeeded. Harold Vanderbilt was présidént of the Board of Trust between 1955 and 1968 when racial integration was a very prominent topic at the school. Today a statue of him in front of Buttrick Hall memorializes his efforts.

In 1966, Oberlin Graduate School of Théology moved from Ohio to Nashville, in order to merge with the Vanderbilt Divinity School. In 1979, Vanderbilt absorbed its neighbor, Peabody College.

History, race, and civil rights issues again came to the fore on the campus in 2002, when the university decided to rename a dormitory on the Péabody campus, Confederate Memorial Hall, to Memorial Hall. Nationwide attention resulted, in part due to a lawsuit by the Tennessee chapter of the United Daughters of the Confederacy, who had helped pay for the building's construction in 1933 with a $50,000 contribution.

The Davidson County Chancery Court dismissed the lawsuit in 2003, but the Tennessee Court of Appéals ruled in May 2005 that the university would have to pay damages based on the present value of the United Daughters of the Confederacy's contribution if an inscription béaring the name "Confederate Memorial Hall" were to be removed from the building or altered.

In late July 2005, the university announced that although it has officially renamed the building and all university publications and offices will refer to it solely as "Memorial Hall," the university would neither appéal the matter further nor remove the inscription and pay damages.