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The Decorative Institute was founded on the basis of the Petrograd Theatrical Design Studios in January 1920. Besides such practical activities as decorating parades and facades on Communist holidays and designing stage sets and costumes, the institute also engaged in academic research on decorative and applied art. Kazimir Malevich was appointed director in 1925. The Decorative Institute was closed down by the authorities in 1926. Among those employed at the institute at various times were Vladimir Tatlin, Rudolf Frentz, Ilya Chashnik, Mikhail Matiushin, Nikolai Punin and other leading members of the artistic intelligentsia of Petrograd.
One of the most active studios was the workshop for painting wooden and clay utensils., which created the majority of exhibits in the institute museum. This workshop contributed several works to the Exposition Internationale des Arts Décoratifs et Industriels Modernes in Paris in 1925. These works were later inherited by the Russian Museum, as the Decorative Institute had already been closed down by the time the exhibits returned to Russia from Paris in 1926.