Today, Rotary is well known throughout the world for its dedication to service and international goodwill. Changing the world through service, however, was hardly uppermost in the mind of Paul P. Harris when he founded the organization in 1905. Harris, a lawyer in Chicago, Illinois, USA, had been raised in a rural village in Vermont. He envisioned a new kind of club for professionals that would kindle the fellowship and friendly spirit he had known in his youth.

On the evening of 23 February 1905, Harris invited three friends to a meeting. Silvester Schiele, a coal dealer, Hiram Shorey, a merchant tailor, and Gustavus Loehr, a mining engineer, gathered with Harris in Loehr's business office in Room 711 of the Unity Building in downtown Chicago. They discussed Harris' idea that business leaders should meet periodically to enjoy camaraderie and to enlarge their circle of business and professional acquaintances. The club met weekly; membership was limited to one representative from each business and profession. Though the men didn't use the term Rotary that night, that gathering is commonly regarded as the first Rotary club meeting.

As they continued to convene, members began rotating their meetings among their places of business, hence the name Rotary. After enlisting a fifth member, printer Harry Ruggles, the group was formally organized as the Rotary Club of Chicago. The original club emblem, a wagon wheel design, was the precursor of the familiar cogwheel emblem now used by Rotarians worldwide.

By the end of 1905, the club's roster showed a membership of 30 with Schiele as president and Ruggles as treasurer. Paul Harris declined office in the new club and didn't become its president until two years later. Club membership grew, making it difficult to gather in offices, so the members shifted their meetings to hotels and restaurants, where many Rotary club meetings are held today.

These early "Rotarians" realized that fellowship and mutual self-interest were not enough to keep a club of busy professionals meeting each week. Reaching out to improve the lives of the less fortunate proved to be an even more powerful motivation. The Rotary commitment to service began in 1907, when the Rotary Club of Chicago donated a horse to a preacher. The man's own horse had died, and because he was too poor to buy another one, he was unable to make the rounds of his churches and parishioners. A few weeks later, the club constructed Chicago's first public lavatory. With these inaugural projects, Rotary became the world's first service-club organization.

Rotary's popularity began to spread throughout the USA. The second Rotary club was chartered in 1908 in San Francisco, California, with a third club formed in Oakland, California. Others soon followed in Seattle, Washington; Los Angeles, California; and New York, New York. When the National Association of Rotary Clubs held its first convention in 1910, Harris was elected president.

At the following year's convention, speakers used the phrases "Service, Not Self" and "He Profits Most Who Serves Best," which became the organization's mottoes. "Service, Not Self," was later changed to "Service Above Self" and has since been adopted as Rotary's primary motto.