The Department of Economics was established together with the Faculty of Cooperatives, which was one of the first four faculties – others including the Faculty of Agriculture, the Faculty of Forestry and the Faculty of Fishery – on the university founding day, 2 February 1943. The faculty was originally located in a building of the Department of Cooperative of the Ministry of Agriculture, next to Prince Chulachuckkaphong palace at Ta-Tien district in Bangkok. During the early years, the Faculty of Cooperative comprised of four divisions: (1) the Economics and Social Sciences Division (2) the Cooperative Division (3) the Accounting Division and (4) the Laws Study Division. Later, in order to expand the area of study and to gain appeals in the job market, the name change was proposed to the Faculty of Economics and Cooperative. However, Field Marshal Plaek Piboonsongkhram, the prime-minister and the head of the Office of the Civil Service Commission at the time, wanted to focus on the importance of cooperative, hence approving the name “the Faculty of Cooperative and Economics” in June 1952, as well as changing the name of the Economics and Social Sciences Division to the Economics Division on the same occasion. In May 1956, the name of the department was changed again to the Faculty of Economics and Cooperative; and at the end of the 1956 – 1957 academic year, the faculty was relocated to the main university campus at Bang Khen district.

In 1966, the name of the faculty was changed once more to the Faculty of Economics and Business Administration along with the expansion of academic subjects. In 1968, in order to provide flexibility in and increase the scope of the university’s academic administration, the Office of the Prime-Minister revised Kasetsart University Act to promote the “division” status to “department”, which was officiated on 8 January 1969. The Department of Economics became one of the six departments of the Faculty of Economics and Business Administration, which consists the departments of Economics, Marketing, Accounting, Agricultural Economics, Cooperative and Business Administration.

In December 1992, the faculty of Economics and Business Administration was split into two faculties: the Faculty of Economics and the Faculty of Business Administration. The Department of Economics has been with the Faculty of Economics ever since.