The creation of BAYT MAL AL QUDS AGENCY was the initiative of His Majesty the late King Hassan II, King of Morocco (May Allah grant him mercy), who presented the idea to the Al-Quds Committee during its 15th session in Ifrane, Kingdom of Morocco in 1995. The idea was presented to the 23rd Islamic Conference of Foreign Ministers held in Conakry, Republic of Guinea from 9-13 December 1995, where it was decided that the BAYT MAL AL QUDS AGENCY be created. The Agency was granted its statute, and later received its final legal status when its first director was appointed and allowed the official commencement of its official activities on 30 July 1998.
 
The agency held its first meeting on 14 February 2000 under the high auspices of His Majesty King Muhammad VI, the King of Morocco, chairman of the Al-Quds Committee and in the presence of the Secretary General of the Organization of the Islamic Conference.

- To salvage the city of Al Quds Al Sharif (Jerusalem);
- To extend assistance to the Palestinian population and Palestinian institutions in the holy capital;
- To safeguard and restore the Al Aqsa Mosque and other holy sites in the city as well the city's cultural, religious, cultural and architectural heritage.

The agency is managed by three bodies as follows:
- An administrative board composed of the Finance Ministers of Member States in the Al Quds Committee.
- Trusteeship Committee composed of Foreign Affairs Ministers of five Member States in the Al Quds Committee, two of whom are permanent members: the Foreign Ministers of the Kingdom of Morocco and the State of Palestine.
- Director General of the agency.

The agency's revenue are derived from the following sources:
- Voluntary contributions from Member States of the OIC.
- Gifts and donations from public and private bodies, such as charitable societies, Arab, Islamic and friendly communities, companies and individuals.
- Returns from the agency's assets, properties, projects, shares and products.