The Efficiency Medal was instituted in 1930 for award to part-time warrant officers, non-commissioned officers and men after twelve years of efficient service on the active list of the Militia or the Territorial Army of the United Kingdom, or of the other Auxiliary Military Forces throughout the British Empire. At the same time a clasp was instituted for award to holders of the medal upon completion of further periods of six years of efficient service.

The medal superseded the Volunteer Long Service Medal, the Volunteer Long Service Medal for India and the Colonies, the Colonial Auxiliary Forces Long Service Medal, the Militia Long Service Medal, the Special Reserve Long Service and Good Conduct Medal and the Territorial Efficiency Medal.

In the British Commonwealth, the Efficiency Medal was gradually superseded by national medals in some member countries, in Canada by the Canadian Forces Decoration in 1951, in the Union of South Africa by the John Chard Medal in 1952 and in Australia by the Reserve Force Medal in 1982. In the United Kingdom the medal was superseded by the Volunteer Reserves Service Medal in 1999. New Zealand continues to award the Efficiency Medal (New Zealand) and is one of a few countries to still do so.