The Union Cabinet in 1984 took a decision to create a Federal Contingency Force comprising of personnel who are highly motivated, specially equipped and well trained to tackle the various manifestations of terrorism. In June 1984, a nucleus consisting of the Director General of NSG and other essential elements were sanctioned and steps were initiated to raise the Force. A bill for creation of this Organization was introduced in the parliament in August 1986 and it received the assent of the President on September 22, 1986 and the National Security Guard (NSG) formally came into being from that date.

The basic philosophy of NSG is swift and speedy strike and immediate withdrawal from the theatre of action. National Security Guard has been given the SPECIFIC ROLE to handle all facets of terrorism in any part of the country as a Federal Contingency Force. The NSG was modelled on the pattern of the SAS of the UK and GSG-9 of Germany. It is a task-oriented Force and has two complementary elements in the form of the Special Action Group (SAG) comprising Army personnel and the Special Ranger Groups (SRG), comprising personnel drawn from the Central Armed Police Forces / State Police Forces.