The article examines the design of a state institution using various functions of the state. The author analyzes the issues of creation and functioning in different historical periods, starting from the era of Roman law, when detailed studies of the indicated issues were not carried out. Zemstvo institutions are considered as a prototype of state (municipal) institutions, which are entrusted through the management of various spheres of life of the population. The wide spread of the institution in the Soviet period of Russia's development is noted. The article analyzes the provisions of the Civil Code of the RSFSR of 1922, the Fundamentals of Civil Legislation of the USSR and the Union Republics of 1961, the Fundamentals of Civil Legislation of the USSR of 1991, as well as the Civil Code of the Russian Federation of 1994 in the original and current edition. The need to use the structure of an institution in the formation of a «new» system of legal entities in a market economy is emphasized. The reasons for reforming the status of state (municipal) institutions in 2006 and 2010 have been determined – reducing the burden of maintaining social institutions by the state through the commercialization of such institutions. The article describes the features of a state institution – this is the only type of state (municipal) institution, the status and activities of which are regulated in detail by the budgetary legislation of the Russian Federation and which is a full participant in the budgetary process. Two cases of the creation of a state institution are given. At the same time, the most common is the situation of using the structure of a state institution to organize the functioning of public bodies in civil circulation and the budget process. The author points out the dual nature of such institutions.