Applied anthropology came into existence during the colonial period to assist the administrators in finding solutions to practical problems. In the beginning, applied anthropology was involved in the application of knowledge by those who were responsible for administration of colonies. Anthropologists prepared ethnographic accounts describing the customs and practices of people, and served as advisers. Knowledge of the language, customs, and traditions of people was found useful by the administrators to deal with the people in the colonies they administered.

Instead of developing theories on socio-cultural change and human behaviour, the applied anthropologists believed in using their knowledge for ameliorating the living conditions of people. A variant of applied anthropology has its emphasis on action. Action anthropologists do not influence the decisions of people, but help in providing clarifications. Finally, the people have to take their decisions. The action anthropologist is one who is helping the people in goal clarification in decision making and choice making, at the same time learning from the people. The American anthropologist, Sol Tax popularised the practice of action anthropology.

Applied anthropologists are said to function as analysts, consultants, administrators, and co-administrators. They are involved in diverse settings and circumstances such as hospitals, factories, schools, prisons, law, management, population policy, agriculture, ethnic problems, and drug abuse.

The term ‘development anthropology’ was used by anthropologists like Glynn Cochrane, who felt that the term applied anthropology had colonial connotation with limited utility. As the focus of the countries is on development, this new label is considered as more appropriate. Development anthropologists study the incorporation of local societies in larger, regional, national, and world economic systems, and the resultant effects.