The CDF was established under Article 158 of the Revised Treaty of Chaguaramas "for the purpose of providing financial or technical assistance to disadvantaged countries, regions and sectors".  It is the centre-piece of the regime to address the disparities among the Member States of CARICOM which may result from the implementation of the CSME. The Agreement Relating to the Operations of the Fund was signed in July 2008 and the CDF began operating on August 24, 2009.

Whilst all Members of the CDF are eligible to receive financial and technical assistance support from the Fund, only the designated disadvantaged countries - the LDCs (OECS and Belize) and Guyana (as a Highly-Indebted Poor Country) received access to resources during the first contribution cycle.

Under the second contribution cycle the MDCs, as well as the LDCs, will be able to access resources to address development challenges in their disadvantaged regions and sectors, once the enabling policy framework and operational procedures are agreed to by the Community. The relevant policy, procedures and implementation plan to facilitate this are currently being developed within the framework of the formulation of Regional Cohesion Policy, which the CDF has taken the lead role in preparing on behalf of the Community.