The Fifty-fourth Massachusetts was organized in March, 1863 at Camp Meigs, Readville, Massachusetts by Robert Gould Shaw, twenty-six year old member of a prominent Boston abolitionist family. Shaw had earlier served in the Seventh New York National Guard and the Second Massachusetts Infantry, and was appointed colonel of the Fifty-fourth in February 1863 by Massachusetts governor John A. Andrew.

As one of the first black units organized in the northernstates, the Fifty-fourth was the object of great interest and curiosity, and its performance would be considered an important indication of the possibilities surrounding the use of blacks in combat. The regiment was composed primarily of free blacks from throughout the north, particularly Massachusetts and Pennsylvania. Amongst its recruits were Lewis N. Douglass and Charles Douglass, sons of the famous ex-slave and abolitionist, Frederick Douglass.

After a period of recruiting and training, the unit proceeded to the Department of the South, arriving at Hilton Head, South Carolina, on June 3, 1863. Soon after it saw its first action at James Island. The regiment earned its greatest fame on July 18, 1863, when it led the unsuccessful and controversial assault on the Confederate positions at Battery Wagner. In this desperate attack, the Fifty-fourth was placed in the vanguard and 281 men of the regiment became casualties (54 were killed or fatally wounded and another 48 were never accounted for). Shaw, the regiment's young colonel, died on the crest of the enemy parapet, shouting, "Forward, Fifty-fourth!"

It was also on the parapet of the battery that Sgt. William H. Carney, Company C, risked his life in an action for which he received the Medal of Honor. His citation reads in part: "When the color sergeant was shot down, this soldier grasped the flag, led the way to the parapet, and planted the colors thereon. When the troops fell back he brought off the flag, under a fierce fire in which he was twice severely wounded.:

That heroic charge, coupled with Shaw's death, made the regiment a household name throughout the north, and helped spur black recruiting. For the remainder of 1863 the unit participated in siege operations around Charleston, before boarding transports for Florida early in February 1864. The regiment numbered 510 officers and men at the opening of the Florida Campaign, and its new commander was Edward N. Hallowell, a twenty-seven year old merchant from Medford, Massachusetts. Anxious to avenge the Battery Wagner repulse, the Fifty-fourth was the best black regiment available to General Seymour, the Union commander. However, only about 500 members of the regiment were present at Olustee, the others having been detailed for other duty.

Along with the 35th United States Colored Troops, the Fifty-fourth entered the fighting late in the day at Olustee, and helped save the Union army from complete disaster. The Fifty-fourth marched into battle yelling, "Three cheers for Massachusetts and seven dollars a month." The latter referred to the difference in pay between white and colored Union infantry, long a sore point with colored troops. Congress had just passed a bill correcting this and giving colored troops equal pay. However, word of the bill would not reach these troops until after the battle of Olustee. The regiment lost eighty-six men in the battle, the lowest number of the three black regiments present.

The 54th, as well as the 35th United States Colored Troops, served as the rearguard for the Union Army and possibly prevented its destruction.

After Olustee, the Fifty-fourth was not sent to participate in the bloody Virginia campaigns of 1864-1865. Instead it remained in the Department of the South, fighting in a number of actions, including the battles of of Honey Hill and Boykin's Mill before Charleston and Savannah.

It was mustered out in August, 1865.