The building of a new, larger United States Navy after the Civil War required an increase in the reserve of manpower; traditionally the Navy had relied on the commercial maritime industry to augment its strength in wartime, but this was no longer a large enough resource (Hart 263). In the 1880s and 1890s, repeated calls to Congress for an establishment of a naval reserve force were met with resistance for both fiscal and philosophical reasons; however, naval militias continued to grow (Naval History and Heritage Command). In March 1888, Massachusetts passed the nation's first Naval Militia bill, creating the Massachusetts Naval Militia (Hart 258). The Lynn division was mustered on September 30, 1892 (Navy Department 28).

The first few Naval Militia units were organized along the lines of a National Guard unit, because in many of the states, the Naval Militia was in theory part of the National Guard, although the latter seldom exercised any real control over it, and the Militia served the needs of the Navy not the state. Throughout its existence, the Naval Militia was used in minor riot or disaster duty but because of its very nature, could not play any major role in maintaining domestic order; however, it provided a reserve of men. On March 2, 1891, Congress passed the first annual appropriation of $25,000 for the "arming and equipping of a Naval Militia." The money was not given to the individual states, but was instead distributed by the Secretary of the Navy, who divided up the money according to the size of each state's militia. Bonuses were given to those units who drilled on a man-of-war vessel for four days (Hart 269-271).

Regular naval officers questioned the value of the militia, as training was sporadic and inconsistent across the units, naval discipline was lacking or absent, and the technical expertise needed to operate the steam powered vessels was complex. However, the Navy's lack of men led it to look to the militias during the Spanish American War in 1898 (Naval History and Heritage Command). In order to use these units, which were not under Federal jurisdiction, Governors had to grant the militiamen a leave of absence from their unit, so that the Federal Government could then enlist them (Hart 275). The militias from Massachusetts, New York, and Michigan, the most developed of the state militias, served together as a unit and were assigned blue-ocean fighting vessels that were captained by regular naval officers (Naval History and Heritage Command).

After the war, the Navy used their experience to plead for a national reserve, drawing up a National Reserve bill, while returning the Militia to its pre-war duties of manning coastal and harbor defenses (Hart 278). Naval militia officials opposed this bill out of fear that it would mean the end of their own state level organizations; this opposition played a large part in Congress' rejection of the bill. This opposition in Congress continued until 1915, when the Naval Reserve was established (Naval History and Heritage Command).