The Quilt was conceived in November of 1985 by long-time San Francisco gay rights activist Cleve Jones. Since the 1978 assassinations of gay San Francisco Supervisor Harvey Milk and Mayor George Moscone, Jones had helped organize the annual candlelight march honoring these men. While planning the 1985 march, he learned that over 1,000 San Franciscans had been lost to AIDS. He asked each of his fellow marchers to write on placards the names of friends and loved ones who had died of AIDS. At the end of the march, Jones and others stood on ladders taping these placards to the walls of the San Francisco Federal Building. The wall of names looked like a patchwork quilt. Inspired by this sight, Jones and friends made plans for a larger memorial. A little over a year later, he created the first panel for the AIDS Memorial Quilt in memory of his friend Marvin Feldman. In June of 1987, Jones teamed up with Mike Smith and several others to formally organize the NAMES Project Foundation. A small group of strangers gathered in a San Francisco storefront to document the lives they feared history would neglect. Their goal was to create a memorial for those who had died of AIDS, and to thereby help people understand the devastating impact of the disease. This meeting of devoted friends and lovers served as the foundation of the NAMES Project AIDS Memorial Quilt.

Public response to the Quilt was immediate. People in the U.S. cities most affected by AIDS — Atlanta, New York, Los Angeles and San Francisco — sent panels to the San Francisco workshop. Generous donors rapidly supplied sewing machines, equipment and other materials, and many volunteered tirelessly.