The original Purple Heart award, known as the The Badge of Military Merit, was instituted by George Washington in 1782 to reward troops for "unusual gallantry" and "extraordinary fidelity and essential service." The award was a purple cloth heart edged in silver braid, and was to be worn over the left breast of the uniform. Only three awards are known to have been issued, of which two are known to exist today. 

The Purple Heart as we know it today was reestablished in 1932, to coincide with the 200th anniversary of the birth of George Washington. The original criteria for award of the Purple Heart as published in the War Department Circular No. 6 of February 22, 1932 states that the medal be awarded to anyone serving in the Army who had received combat-related injuries or had received the AEF's Meritorious Service Citation Certificate during WWI, the latter criteria harkening back to the intent of George Washington's "Badge of Military Merit".

Although this award was retroactive to any soldier wounded from the Civil War on, eligible recipients were required to submit a formal application to the War Department for approval before the issuance of the medal. While the Purple Heart was not authorized by the Navy until 1942, sailors and Marines who had been wounded prior to 1932 were eligible to apply for the medal.

In April 1942, the War Department amended its policy regarding the issuance of the Purple Heart. The new regulations authorized the posthumous award of the Purple Heart retroactive to December 7, 1941, and eliminated the use of the medal as a merit award.

In December 1942, the Navy Department authorized the award of the Purple Heart for all fatal and non-fatal wounds retroactive to December 7, 1941. However, sailors and Marines wounded prior to this date were still eligible to receive a Purple Heart upon application.

The award of the medal during WWII became increasingly decentralized. Authority for the award was given to hospital commanders and unit commanders in the case of non-fatal wounds, and the War Department in the case of fatal wounds awarded to the next of kin.

Awards for the Vietnam era and later periods fall into two categories: awards for wounds received in the Vietnam Theatre of Operations (Vietnam, Cambodia, and Laos) and other geographical areas, including the attack on the USS Pueblo, the Dominican Republic, and Cuba.

Current Awards: In addition to awards to those killed or wounded "in any action against an enemy of the United States", the criteria for the award of the medal was amended to include those killed or wounded as a result of "an international terrorist attack," and "as part of a peacekeeping force." Thus in addition to awards for Grenada (Operation Urgent Fury), Panama (Operation Just Cause) and Iraq (Operation Desert Storm and Operation Iraqi Freedom) the medal is awarded for fatal and non-fatal wounds arising as a result of peacekeeping efforts such as Lebanon, Haiti, Somalia, and Bosnia-Croatia. Source: