The Business and Transportation Agency, a super-agency grouping together certain business-regulating and transportation-oriented departments, was established in stages between 1967 and 1969. The agency's origins, however, go back to 1961. That year the Legislature established the Transportation Agency headed by an Administrator (Stats. 1961, ch. 2073), and included the Departments of Public Works, Motor Vehicles and California Highway Patrol. The Agency was briefly known as the Highways and Transportation Agency (Stats. 1963, ch. 1364). The original agency name was restored in 1965 (Stats. 1965, ch. 493). In 1967, the Legislature (Stats. 1967, ch. 1540) authorized Governor Ronald Reagan to reorganize state agencies by executive order. Governor Reagan acted to reorganize the Transportation Agency by an executive order of February 20, 1967. This order sanctioned the expansion and reorganization of the agency by adding four transportation departments - Aeronautics, C.H.P., Motor Vehicles, and Public Works - certain business regulatory and other departments: Alcoholic Beverage Control, Banking, Corporations, Housing and Community Development, Insurance, Real Estate, and Savings and Loan. Additionally, six service-oriented departments - General Services, Professional & Vocational Standards, Franchise Tax Board, State Employees Retirement System, State Fire Marshal, and State Personnel Board - were transferred from the expired Business and Commerce Agency and grouped within the Agency's structure. In February, 1968, the Governor presented to the Legislature his Reorganization Plan No. 1. The effect of this plan was to transfer the service oriented departments to a new Agriculture and Services Agency and keep the remaining departments under Business and Transportation. Legislation in 1969 (Stats. 1969, ch. 138) solidified and spelled out the essential powers and duties of the Agency and its head, now called the Secretary. The Secretary was authorized, among other responsibilities, to assist the Governor in major policy and program matters affecting the Agency's units and serve as the principle communication link for transmitting policy problems and decisions between the Governor and the Agency's departments and units. The Secretary also served as chairman and/or a member of various important State bodies, such as the California Toll Bridge Authority and the State Highway Commission, as well as on numerous ad hoc cabinet-level committees.

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