The Capitols were founded in 1946 as a charter BAA team; it became a charter NBA team in 1949. It was one of seven teams that quickly left the NBA: The NBA contracted after the 1949-1950 season, losing six teams: The Anderson Packers, Sheboygan Red Skins and Waterloo Hawks jumped to the NPBL, while the Chicago Stags, Denver Nuggets and St. Louis Bombers folded. The league went from 17 teams to 11 before the 1950-1951 season started. Midway through the 1950-1951 season, the Washington Capitols folded as well, bringing the number of teams in the league down to ten.
The team was coached from 1946 to 1949 by NBA Hall of Famer Red Auerbach.
Earl Lloyd, the first African American athlete to play for an NBA team, debuted for the Capitols at Uline Arena on October 31, 1950.
The franchise played the 1951–52 season in the American Basketball League, but the team folded again in January, 1952.
The teams wore green and white. The NBA returned to the Washington, D.C. area in 1973, when the Baltimore Bullets became the Capital Bullets, now known as the Washington Wizards.