The RLM was formed in April 1933 in the center of Berlin, from the Reichskommissariat für die Luftfahrt, which had been establised two months earlier with Hermann Göring at its head. In this early phase the RLM was little more than Göring's personal staff.
One of its first actions was to requisition control of all patents and companies of Hugo Junkers, the German aeronautical engineer. These included all rights to the Junkers Ju 52 aircraft.
General Werner von Blomberg, head of Oberkommando West and one of the most powerful people in Germany's then-small Army, decided that the importance of aviation was such that it should no longer be subordinate to the Army. In May 1933 he transfered the Luftschutzamt, the army's Department of Military Aviation, to the RLM. This is often considered the birth of the Luftwaffe. The RLM was now much larger, consisting of two large departments (Amt): the military Luftschutzamt (LA) and the civilian Allgemeines Luftamt (LB). Erhard Milch was placed in direct control of the LA, in his function as Staatssekretär der Luftfahrt.
In September a reorganization was undertaken to reduce duplication of effort between departments. The primary changes were to move the staffing and technical development organizations out of the LB, and make them full departments on their own. The result was a collection of six: Luftkommandoamt (LA), Allgemeines Luftamt (LB), Technisches Amt (LC, but more often referred to as the T-amt) in charge of all research and development, Luftwaffenverwaltungsamt (LD) for construction, Luftwaffenpersonalamt (LP) for training and staffing, and the Zentralabteilung (ZA), central command. In 1934 an additional department was added, the Luftzeugmeister (LZM) in charge of logistics.
In any organizational sense, the RLM was as good as any similar organization in other countries. With the excellent personal relations between Göring and Hitler, the RLM had better political support than most. However Göring staffed the RLM with politicos who spent as much time trying to rise up the organizational chart as they did working their jobs.
The problem became particularly acute between 1939 and 1942, when the organization had grown so large that Göring was no longer able to maintain control. This period is marked by an inability to deliver new aircraft designs that were desperately needed, as well as continued shortages of aircraft and engines. The only thing the Luftwaffe had in any number were men, so many in fact that some were formed into a infantry division under command of the Luftwaffe, a ridiculous concept that was invented simply to keep from losing them to the Army.
In 1943 Albert Speer took over from Milch, and things immediately improved. Given Hitler's complete blessing, he was able to cut through the rigid hierarchy and make needed changes almost overnight. Aircraft production shot up, and projects that had been hampered for political reasons, like the Heinkel He 219 Uhu were finally able to proceed. But this time it was too late however, and in the summer of 1944 they were not ready to take on the massive Allied air forces that appeared over Germany.