The Khalsa Diwan Society was founded on July 22, 1906, and was registered on March 13, 1909. The corporate name was “The Khalsa Diwan Society”. Their first site and gurdwara were built in 1908 at 1866 West 2nd Avenue. It was inaugurated on January 19, 1908. The financial situation of the society depended on the number of Sikhs living in British Columbia. Donations rose considerably as more Sikhs came to British Columbia. The population of Sikhs rose in the period of 1904–1908, the population is 5,185. It fell to 2,342 in 1911. The Sikh population dwindled even more, to 1,099, as the year 1918 approached. Verne A. Dusenbery, the author of "Canadian Ideology and Public Policy: The Impact on Vancouver Sikh Ethnic and Religious Adaptation," wrote that the gurdwara served as "truly a religious, social, political, cultural, and social service center for the entire South-Asian immigrant population of the lower mainland" during its early history.
In the 1940s the KDS served in a leadership role as Indo-Canadians asked for voting rights, and it did so in a secular capacity. The KDS had a secular role as a community centre and also served Hindus and Muslims among the Indo-Canadians. Raj Hans Kumar, an author of “Gurdwara as a Cultural Site of Punjabi Community in British Columbia, 1905 – 1965," stated that in political affairs the KDS represented all "Hindus", which at the time meant all people of East Indian origin. In the early 1950s, a serious split occurred in the Canadian Sikh community, when the Khalsa Diwan Society elected a clean-shaven Sikh to serve on its management committee. Although most of the early Sikh immigrants to Canada were non-Khalsa, and a majority of the members of the society were clean-shaven non-Khalsa Sikhs, a faction objected to the election of a non-Khalsa to the management committee.
The factions in Vancouver and Victoria broke away from the Khalsa Diwan Society and established their own gurdwara society called Akali Singh. The Akali Singh Society opened in 1952. By the late 1950s, there were plans to establish Punjabi language students for Canadian-born children and to collect funds for a new community centre. In 1963 the society began planning for a new gurdwara and community centre. The society decided to build a new gurdwara in 1969. The society purchased 2.75 acres of city land in 1968. Construction was completed in the first week of April 1970 for a price of $6,060. Sri Guru Granth Sahib was moved from the 2nd Avenue Gurdwara to the Ross Street Gurdwara on Vasakhi Day 1970.
The initial plans asked for a library and community centre, but these aspects were eliminated from the plans. Construction happened from winter 1969 to April 1970. The celebration for Guru Nanak's 500th birthday was held prior to the grand opening in 1970. The building is intended to look like a lotus rising from the water. To get inspiration for the style, the architect travelled to Agra and Amritsar. In 1979 the annual income of the KDS was $300,000. That year the leadership of the gurdwara changed.
Previously the KDS was controlled by Marxist Sikhs who did not practice Sikhism. The membership had been around 5,000 prior to 1979, as there was a $12 membership fee. Membership increased after the elimination of the fee. According to Kamala Elizabeth Nayar, in 1984 the pro-Khalistan organisation World Sikh Organization began controlling the gurdwara. According to Hugh Johnston, Vancouver Sikhs stated that the political bloc that took charge of the KDS Gurdwara network by 1979 consisted of about 10-15 families
Every March the celebration of the martyrdom of Mewa Singh is held. Sikhs from California go to the KDS to celebrate the event.