Operated by New Orleans Public Service (NOPSI) since 1922, it was one of the last urban transit systems in the U.S. to be transferred from private to public operation. NOPSI began to lose money on the system as the prosperous post-war years changed people's travel patterns. Its investors were unhappy about subsidizing the system, and because it was not eligible for federal funding, there was no opportunity for long-term development of a modern urban transit system.

To solve these problems, in 1979 the Louisiana State Legislature created the RTA, placing it under control of a board of commissioners to be appointed by government bodies from participating parishes. The board was charged with successfully transferring the bus and streetcar operation from NOPSI to the new Regional Transit Authority.

From 1979 until 1983, the RTA board met, planned and negotiated the NOPSI buyout. RTA's small staff worked with the Mayor's Office of Transit Administration to apply for federal funds to enhance transit amenities and lay the groundwork for the future improvements to the system. NOPSI staff also worked toward its divestiture with the city, state and the RTA. Finally in July 1983, all three staffs came together under the RTA.