The Victoria Cross is awarded for:

“ ... most conspicuous bravery, or some daring or pre-eminent act of valour or self-sacrifice, or extreme devotion to duty in the presence of the enemy. ”

A recommendation for the VC is normally issued by an officer at regimental level and has to be supported by three witnesses, although this has been waived on occasion. The recommendation is then passed up the military hierarchy until it reaches the Secretary of State for War, now known as the Secretary of State for Defence. The recommendation is then laid before the monarch who approves the award with his or her signature. Victoria Cross awards are always promulgated in the London Gazette with the single exception of the award to the American Unknown Soldier in 1921. The Victoria Cross warrant makes no specific provision as to who should actually present the medals to the recipients. Queen Victoria indicated that she would like to present the medals in person and she presented 185 medals out of the 472 gazetted during her reign. Including the first 62 medals presented at a parade in Hyde Park on 26 June 1857 by Queen Victoria, nearly 900 awards have been personally presented to the recipient by the reigning British monarch. Nearly 300 awards have been presented by a member of the royal family or by a civil or military dignitary. About 150 awards were either forwarded to the recipient or next of kin by registered post or no details of the presentations are known.

Originally, the VC could not be awarded posthumously. Between the Indian Mutiny and 1897 and the beginning of the Second Boer War the names of six officers and men were published in the London Gazette with a memorandum stating they would have been awarded the Victoria Cross had they survived. A further three notices were published in the London Gazette in September 1900 and April 1901 for gallantry in the Second Boer War. In a partial reversal of policy, six posthumous Victoria Crosses, all for South Africa including the three officers and men mentioned in the notices in 1900 and 1901 were granted on 8 August 1902. Five years later in 1907, the posthumous policy was completely reversed and medals were sent to the next of kin of the six officers and men. The awards were mentioned in notices in the Gazette dating back to the Indian Mutiny. The Victoria Cross warrant was not amended to include posthumous awards until 1920 but one quarter of all awards for World War I were posthumous.

In the case of a gallant and daring act being performed by a squadron, ship's company or a detached body of men (such as marines) in which all men are deemed equally brave and deserving of the Victoria Cross then a ballot is drawn. The officers select one officer, the NCOs select one individual and the private soldiers or seamen select two individuals. In all 46 awards have been awarded by ballot with 29 of the awards during the Indian Mutiny. Four further awards were granted to Q Battery, Royal Horse Artillery at Korn Spruit on 31 March 1900 during the Second Boer War. The final ballot awards for the Army were the six awards to the Lancashire Fusiliers at W Beach during the landing at Gallipoli on 25 April 1915 although three of the awards were not gazetted until 1917. The final seven ballot awards were the only naval ballot awards with three awards to two Q-Ships in 1917 and four awards for the Zeebrugge Raid in 1918. The provision for awards by ballot is still included in the Victoria Cross warrant but there have been no further awards since 1918.

Between 1858 and 1881 the Victoria Cross could be awarded for actions taken "under circumstances of extreme danger" not in the face of the enemy. Six such awards were made during this period - five of them for a single incident (a shipwreck off the Andaman Islands in 1867). In 1881, the criteria were changed again and the VC was only awarded for acts of valour "in the face of the enemy". Due to this it has been suggested by many historians that the changing nature of warfare will result in fewer VCs being awarded. The prevalence of more remote fighting techniques has meant that the opportunity to carry out acts of bravery are diminishing. Since 1940, military personnel who have distinguished themselves for gallantry not in the face of the enemy have been awarded the George Cross, which ranks immediately after the VC in the Order of Wear.

The Victoria Cross was extended to colonial troops in 1867. The extension was made following a recommendation for gallantry regarding colonial soldier Major Charles Heaphy for action in the New Zealand land wars in 1864. He was operating under British command and the VC was gazetted in 1867. Later that year, the Government of New Zealand assumed full responsibility for operations but no further recommendations for the Victoria Cross were raised for local troops who distinguished themselves in action. Following gallant actions by three New Zealand soldiers in November 1868 and January 1869 during the New Zealand land wars, an Order-in-Council on 10 March 1869 created a “Distinctive Decoration” for members of the local forces without seeking permission from the Secretary of State for the Colonies. Although the Governor General was chided for exceeding his authority, the Order in Council was ratified by the Queen. The title “Distinctive Decoration” was later replaced by the title New Zealand Cross.

The question of whether recommendations could be made for colonial troops not serving with British troops was not asked in New Zealand, but in 1881, the question was asked in South Africa. Surgeon John McCrea, an officer of the South African forces was recommended for gallantry during hostilities which had not been approved by British Government. He was awarded the Victoria Cross and the principle was established that gallant conduct could be rewarded independently of any political consideration of military operations. More recently, four Australian soldiers were awarded the Victoria Cross in Vietnam although Britain was not involved in the conflict.

Indian troops were not originally eligible for the Victoria Cross since they had been eligible for the Indian Order of Merit since 1837 which was the oldest British gallantry award for general issue. When the Victoria Cross was created, Indian troops were still controlled by the Honourable East India Company and did not come under Crown control until 1860. European officers and men serving with the Honourable East India Company were not eligible for the Indian Order of Merit and the Victoria Cross was extended to cover them in October 1857. It was only at the end of the 19th Century that calls for Indian troops to be awarded the Victoria Cross intensified. Indian troops became eligible for the award in 1911. The first awards to Indian troops appeared in the London Gazette on 7 December 1914 to Darwan Sing Negi and Khudadad Khan. Negi was presented with the Victoria Cross by King George V during a visit to troops in France. The presentation occurred on 5 December 1914 and he is one of a very few soldiers presented with his award before it appeared in the London Gazette.

In recent years, several Commonwealth countries have introduced their own honours systems, separate from the British Honours System. This began with the Partition of India in 1947, when the new countries of India and Pakistan introduced their own systems of awards. The VC was replaced by the Param Vir Chakra (PVC) and Nishan-e-Haider respectively, although the new countries continued to permit winners of British honours to wear their awards. Several Pakistani soldiers and officers were authorised to wear both the British medals and the ones earned in the later Indo-Pakistani wars. Three Commonwealth realms: Australia, Canada and New Zealand, have each introduced their own decorations for gallantry and bravery, replacing British decorations such as the Military Cross with their own. Most Commonwealth countries, however, still recognise some form of the VC as their highest decoration for valour.

Australia was the first Commonwealth realm to create its own VC, on 15 January 1991. Although it is a separate award, its appearance is identical to its British counterpart. Canada followed suit when in 1993 Queen Elizabeth signed Letters Patent creating the Canadian VC, which is also similar to the British version, except that the legend has been changed from FOR VALOUR to the Latin PRO VALORE This was to accommodate both French and English, the two official languages of Canada. While the New Zealand and Australian awards are still made from the gunmetal captured during the Crimean War, the Canadian VC is not, and it is currently made of metal from an unspecified source.

New Zealand was the third country to adapt the VC into its own honours system. While the New Zealand and Australian VCs are technically separate awards, the decoration is identical to the British design, including being cast from the same Crimean War gunmetal as the British VC. As of July 2007, only one of the separate VCs has been awarded, to a New Zealand serviceman, Bill Apiata, on 2 July 2007, for his actions in conflict in Afghanistan in 2004. A Canadian version has been cast that was originally to be awarded to the Unknown Soldier at the rededication of the Vimy Memorial on 7 April 2007. This date was chosen as it was the 90th anniversary of the battle of Vimy Ridge but pressure from Veterans organisations caused the plan to be dropped.