The Texas legislature, with the support of Governor John Connally, established the Commission for Indian Affairs in 1965. At the time, the Alabama-Coushatta Indian Reservation, located in the Big Thicket in Polk County, was the only reservation in Texas. It consisted of 1,280 acres. The reservation had been administered and supervised by the Board for Texas State Hospitals and Special Schools, which was abolished in 1965; the legislature subsequently established the Commission for Indian Affairs to administer the reservation. Various amendments over the years changed the statute that created the commission. In 1967 the Ysleta del Sur Pueblo, or Tigua Indian Community, was added to the act. The Tiguas, from El Paso County, did not gain federal recognition as an Indian tribe until 1968. Under the 1965 act the commission was composed of three members, appointed by the governor, from the eastern section of the state. With the addition of the Tiguas, the regional qualification was dropped. In 1975 the Commission for Indian Affairs was renamed the Texas Indian Commission. Another major change in the agency occurred in 1977, when the legislature added the Texas Band of the Kickapoo Indians at Eagle Pass to its jurisdiction. The Kickapoos gained federal recognition in 1984. Unlike the other tribes under the commission's jurisdiction, the Kickapoos remained trustees of the federal government and received no state money. The other major change made in 1977 required at least one member of the commission to be an Indian. The commission was initally headquartered at the Alabama-Coushatta Indian Reservation and later moved to Austin.
In addition to acting as a link between the tribe and other state agencies, the commission was to oversee the "development of the human and economic resources" of the reservations and to "assist the Texas Indian tribes in improving their health, educational, agricultural, business, and industrial capacities." A major goal of the commission was to help the tribes achieve financial self-sufficiency. Members of the commission were appointed for six years; one seat came up for appointment every two years. A chairman, elected by the commission for a two-year term, reported to the governor, represented the commission at public events, and made recommendations to the legislature and to the other members. The commission was required to have three public meetings a year, one at the Alabama-Coushatta Indian Reservation, one at the Tigua Indian Reservation, and one in the Dallas area, where numerous Indians resided. From 1977 onward the commission had an appointed executive director who was responsible for "implementation of the policies of the commission" and seeking financial aid. The executive director employed a superintendent at each reservation. The commission had about 125 full-time employees and 100 additional part-time workers during the tourist season. Only 15 percent of the employees were paid by state funds; the others were paid with money raised by the reservations.
In 1985 the Alabama-Coushattas and the Tigua Pueblo, who were dissatisfied with state management of their affairs, petitioned the federal government to extend federal trust protection over their reservations. The federal government approved the request, a move that later set in motion the demise of the Texas Indian Commission. In 1989 it came under review by the Texas Sunset Advisory Commission, which recommended that the Indian Commission be changed from a supervisory agency to an advocacy office; that its membership be raised from three (only one of whom was Native American) to six (all of whom were to be Native American); and that the agency should become a private, nonprofit foundation by September 1993. Much to the dismay of civil-rights groups and American Indian activists, the legislation that would have authorized this change was allowed to die in the Texas legislature in May 1989, and the commission closed at the end of August of that year. The last executive director of the commission was Ray Apodaca, a member of the Tigua tribe.