"D-I" schools are the major collegiate athletic powers, with larger budgets, more elaborate facilities, and higher numbers of athletic scholarships. This level was once called the "University" division of the NCAA in contrast to the "College" division; this terminology was replaced with the current numeric (I, II, III) divisions in 1973. In football only, Division I was further subdivided into Division I-A (the principal football schools) and Division I-AA in 1978. Subsequently the term "Division I-AAA" was added to delineate Division I schools which do not field a football program at all.

A controversy recently arose in the NCAA over whether schools will continue to be allowed to have one showcased program in Division I with the remainder of the athletic program in a lower division, as is the case of, notably, Johns Hopkins University in lacrosse and Colorado College in ice hockey. This is an especially important issue in hockey, which has no Division II competition and has several Division II and Division III athletic programs competing in Division I. This controversy was resolved at the 2004 NCAA Convention in Nashville, Tennessee when the members supported Proposal 65-1, the amended legislation co-sponsored by Colorado College, Clarkson University, Hartwick College, Johns Hopkins University, Rensselaer Polytechnic Institute, Rutgers University-Newark, St. Lawrence University, and SUNY Oneonta. Each school affected by this debate is allowed to grant financial aid to student-athletes who compete in Division I programs in one men's sport and one women's sport. It is still permitted for other schools to place one men's and one women's sport in Division I going forward, but they cannot offer scholarships without bringing the whole program into compliance with Division I rules.

Division II schools tend to be smaller public universities and many private institutions. Athletic scholarships are offered in most sponsored sports at most institutions, but with more stringent limits as to the numbers offered in any one sport than at the Division I level. For example, Division II schools may give up to 36 football scholarships (where as Division I-A, the highest level, is allowed 85 football scholarships), although some Division II conferences limit the number of scholarships to a lower level. Division II scholarship programs are frequently the recipients of student-athletes transferring from Division I schools; a transfer student does not have to sit out a year before resuming sports participation as would be the case in the event of transferring from one Division I institution to another (with the exception of football players transferring from a Division I-A school to a I-AA school, who also do not have to sit out a year).

The division consists of colleges and universities that choose not to offer athletically related financial aid (athletic scholarships) to their student-athletes. There are over 420 member institutions, making DIII the largest of the three divisions sanctioned by the National Collegiate Athletic Association.

D-III schools range in size from less than 500 to over 10,000 students. D-III schools compete in athletics as a non-revenue making, extracurricular activity for students; hence, they may not offer athletic scholarships, they may not redshirt freshmen and they may not use endowments or funds whose primary purpose is to benefit their athletic programs.