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The IIASA charter was signed on 4 October 1972 at the Royal Society in London. The original signatories included 12 countries: Canada, Czechoslovakia, France, East and West Germany, Japan, Bulgaria, Poland, the USSR, United Kingdom, and the USA. The institute was the brought to life by the cooperation of then US president Lyndon Johnson and USSR Premier Alexey Kosygin. The idea was to use scientific cooperation to build bridges across the Cold War divide, working together on  international challenges that affected countries across borders.

Over the years, IIASA scientists have achieved groundbreaking scientific findings with application to policy around around world. The institute was one of the first research centers to address climate change, hosting a 1978 conference that produced one of the first international assessments of the problem, and has continued to make key contributions to the field. In 1981, IIASA researchers published the first global and long-term study of future energy prospects, Energy in a Finite World. IIASA analysis has formed the backbone of European air pollution policy since the 1980s, including the latest agreement that became law in December 2016, and is now being applied around the world. The institute has also contributed to many technical advances in modeling, uncertainty, and systems analysis.

After the Cold War ended, IIASA members decided to broaden its mandate to be more global in focus, and expanded its membership to more countries around the world. Today the institute has 24 member countries from around the world, and IIASA research finds application in policymaking at all levels: from UN agencies and other international agreements, national governments, and local decision makers. The institute is currently in the process of evaluating its structures, processes, and activities to inform the formation of a new strategic plan to be launched in 2020.