The original inspiration for a permanent public art gallery in San Diego can be traced to the Panama-California International Exposition, held in Balboa Park during 1915–1916. The Exposition, which was organized to celebrate the opening of the Panama Canal and to promote San Diego as a seaport, also showcased San Diego as a growing cultural center. Among its numerous displays representing various industries and products was a prominent exhibition of fine arts featuring European old masters, American art, and works by California and San Diego artists. The public response to the art exhibition convinced civic leaders and prominent local artists that San Diego needed its own fine arts gallery and collection.

Planning for the new museum began in 1922 when local business and civic leader, Appleton S. Bridges (1849–1929), offered to fund the construction of a permanent structure to house a municipal art collection. A prominent site on the north side of Balboa Park’s Plaza de Panama was secured and construction got underway in April 1924. The Fine Arts Society subsequently formed in 1925 from the merger of the San Diego Art Guild and the Friends of Art to operate the new museum.

Bridges hired one of San Diego’s leading architects at the time, William Templeton Johnson (1877–1950), to design and construct the new art gallery. The Spanish Colonial–style architecture from the 1915 Exposition suggested the style for Johnson’s design. Johnson and his associate, Robert W. Snyder (1874–1955), however, went one step further and looked directly to sixteenth-century Spanish Renaissance models in the plateresque style for inspiration. For the building’s exterior, they borrowed motifs from the Cathedral of Valladolid, Spain, and the façade of the University of Salamanca, Spain, while for the interior they adapted features of the Hospital de la Santa Cruz in Toledo, Spain.

Architectural sculptor Chris Mueller, who had supervised the architectural details of the 1915 Exposition buildings, enhanced the façade with the addition of sculptural elements including life-sized sculptures of Spanish Old Master painters Velázquez, Murillo, and Zurbarán as well as heraldic devices and the coats-of-arms of Spain, the United States, California, and San Diego.

As construction was nearing completion in the spring of 1925, Bridges asked Johnson to help find someone to run the new gallery. At the recommendation of Archer M. Huntington, founder of the Hispanic Society of America, Dr. Reginald Poland (1893–1975), then director of education at the Detroit Institute of the Arts, was hired as the Museum’s first director.