In 1898 when Albany State (then the New York State Normal College) had its buildings on Willett Street, among the student body were two women interested in forming a literary society on campus. They were Edith Stoneman and Gertrude Hall. With the counsel of Dr. William J. Milne, they gathered together nine other students and on February 15, 1898, they organized Psi Gamma Sorority. Mrs. Margaret Mooney, a well known author of English textbooks and head of the English Department of the Normal School, was the first Sponsor. Miss L. Elizabeth Reed, a graduate student from Cornell, was elected the first president. Psi Gamma made its first appearance as a factor in the social life of the campus when they produced a Shakespearean play at a reception given for the college in the spring of 1898.
The Psi Gamma Alumnae Association was formed in 1922. Two years later, they were incorporated.