By law, the United States Institute of Peace is governed by a bipartisan Board of Directors. The board is composed of twelve members from outside federal service appointed by the President of the United States and confirmed by the Senate, and four ex-officio members: the secretary of state (who may designate another Senate-confirmed State Department official), the secretary of defense (who may designate another Senate-confirmed Defense Department official), the president of the National Defense University (who may designate the vice president of the National Defense University), and the president of the Institute (nonvoting). The board is prohibited by law from having more than eight voting members of the same political party.

The Board of Directors actively oversees the activities of the United States Institute of Peace—setting long-term goals and priorities for the Institute as well as monitoring the Institute's financial, administrative, and personnel policies. The board approves major new program initiatives and makes final decisions in the selection of Institute grantees, and fellows. To accomplish these tasks, the board meets five times each year in regular meetings, with special meetings of Board subgroups convened as necessary.

Members appointed to serve on the Board of Directors may serve no more than two four-year terms, although they may continue to serve until replaced. Many distinguished Americans from across the country have served on the board since the Institute's founding.

The chair and vice chair of the Board of Directors are elected by the board from among the twelve directors appointed from outside federal service. The chair, or the vice chair in the chair's absence, presides over all meetings of the board and serves for a term of three years. The current chair of the Board of Directors is Stephen J. Hadley. The current Vice Chair is George E. Moose.