The world's first service club was the Rotary Club of Chicago, Illinois, USA. The club was formed 23 February 1905 by lawyer Paul P. Harris and three friends — a merchant, a coal dealer, and a mining engineer. Harris wished to recapture the friendly spirit he had felt in the small town where he had grown up. The name "Rotary" was derived from the early practice of rotating meetings among members' offices. 

The first Rotary club was formed to promote fellowship among its members. Word of the club soon spread and other businessmen were invited to join. By the end of 1905, the Rotary Club of Chicago had 30 members. Three years later, a second club was formed inSan Francisco, California, USA. 

As Rotary grew, its focus shifted to service and civic obligations. Early service projects included building public "comfort stations" near Chicago's City Hall and delivering food to needy families. In 1913, the 50 Rotary clubs then in existence contributed US$25,000 for flood relief in two US Midwestern states. 

By the end of its first decade, Rotary had grown so large (nearly 200 clubs and more than 20,000 members) that a district structure was required. During Rotary's second decade, clubs were launched in South and Central America, India, Cuba, Europe, the Philippines, Australia, New Zealand, and South Africa. 

During World War I, Rotary discovered new areas of service — at home in war relief and peace-fund drives as well as in active service and overseas in emergency efforts. After World War II, many clubs disbanded during the war were re-established, initiating a new era of service. Clubs in Switzerland and elsewhere organised relief efforts for refugees and prisoners of war. Forty-nine Rotarians participated in the 1945 United Nations Charter Conference in San Francisco. 

The Rotary Foundation was established in 1917 as an endowment fund and became The Rotary Foundation in 1928. When Paul Harris died in 1947, Rotarians donated generously to the Foundation as a memorial. 

The Rotary Foundation's first program was Graduate Fellowships (now called Ambassadorial Scholarships), which sent 18 students abroad to seven countries in 1947