The first Montenegrin state Order was established by H.R.H. Prince Danilo Petrović in 1853, as the Order of Danilo I for the independence of Montenegro in 1852-53. This Decoration is still awarded to prominent champions of the preservation of Montenegrin independence and the conditions by which the Order is awarded were defined by Statute.

Alterations were made to the appearance of the original decoration created by Prince Danilo and during the rule of H.M. King Nikola I Petrović the Order underwent two restructures. During the first restructure in 1861, three classes were introduced, while in the second restructure, from 1873, an additional class was added, so that not only is there a star in the 1st class but also a 2nd class with star was introduced.

Many deserving men and women have been awarded the Order of Prince Danilo I over time including foreigners. The illustrious list includes many decorated servicemen during the World Wars and a host of other notables, including Queen Victoria and King Edward VII of Great Britain, Emperor Alexander III of Russia, Emperor Nicholas II of Russia, Emperor Franz Joseph I of Austria, King Christian X of Denmark, Prince Arthur, Duke of Connaught and Strathearn, Nikola Tesla, Artur Schnabel, Sol Butler, Ulysses Lappas, Prince Albert II of Monaco, Filip Vujanović, President of Montenegro and Neboj�a Kaluderović, Ambassador of Montenegro to the United Nations, as well as being written about by F. Scott Fitzgerald in 'The Great Gatsby'.