The Erection of Lighthouses Act 1786 (26 Geo. III, c.101) founded the Commissioners of Northern Lighthouses (numbering 19), who had the power to borrow money, purchase land, levy dues from ship owners, and to construct lighthouses. The first lighthouse constructed by the NLC was Kinnaird Head, near Fraserburgh, opened in 1787. The jurisdiction of the Commissioners was extended by statute to include the Isle of Man (under the Isle of Man and Calf of Man Lighthouses Act 1815: 55 Geo. III, ch.lxvii) and lighthouses established by burghs and other local authorities under the Lighthouses Act 1836 (6 & 7 Will. IV, c.79), which also made plans for new lighthouses to be built by the Commissioners subject to approval of Trinity House. The powers of Trinity House were strengthened and the funding of lighthouses consolidated into the Mercantile Marine Fund under the Merchant Shipping Law Amendment Act 1853 (16 & 17 Vict., c.131). The Merchant Shipping Act 1894 (57 & 58 Vict., c.60) confirmed the Commissioners of Northern Lighthouses as the authority for lighthouses in Scotland and the adjacent seas and islands, and the Isle of Man. The Merchant Shipping Act 1979 freed the Commissioners from the supervision of Trinity House.

The Northern Lighthouse Board, together with Trinity House (England, Wales and the Channel Isles) and the Commissioners of Irish Lights (Eire and Northern Ireland) are the General Lighthouse Authorities for the United Kingdom and Ireland. Running costs are met from a 'General Lighthouse Fund', financed by the collection of Light Dues paid by commercial ships calling at British and Irish ports, and by fishing vessels over 10 metres in length. The fund, although administered by the Department for Transport, Local Government and the Regions, is entirely self-financing, and receives no grant from the Exchequer. The powers and duties of the General Lighthouse Authorities are laid down in the Merchant Shipping Act 1995 (c.21). All the NLC's lighthouses have been automated for operational purposes since end March 1998.