The Free Academy was established during a period in which New York expanded its public education to meet the needs of a rapidly growing and modernizing city. The Board of Education was established in 1842 to oversee the existing public schools and establish new schools in those parts of the city where none existed. This was accomplished by 1846, when each city ward had primary and grammar schools for grades one to seven. It was also in 1846 that Townsend Harris became President of the Board of Education, a position from which he advocated the establishment of public higher education in the form of a high school or college. At the time, fourteen year olds who had completed the seven years of public school could only go on to private academies or colleges such as the aristocratic Columbia College or the young and struggling New York University. Harris advocated a school for students of more modest means, and a bill to establish the Free Academy was passed by the New York State Legislature and signed by the Governor on May 7, 1847.
On January 15, 1849, 149 male students assembled for the opening of the Free Academy. Because there were no public high schools in New York at the time, and the school had yet to establish strict admission standards, some students were as young as twelve.
