Islamic University, Kushtia was founded on November 22, 1979 at Shantidanga-Dulalpur (Kushtia-Jhenidah) by the late president Ziaur Rahman based on the recommendation of Islamic University Planning Committee headed by Professor Dr. M. A. Bari. The Islamic University Act was passed by National Assembly of Bangladesh on December 27, 1980. On January 1, 1981 the government of Bangladesh appointed Dr. A. N. M. Mamtajuddin Choudhury as the first vice-chancellor and the university became operational that year.
As construction of several important buildings began, a presidential decree was issued on May 15, 1982 to shift the university from Shantidanga-Dulalpur to Boardbazar, Gazipur on an area of 50 acres. The construction of an academic building, two residential halls and other necessary infrastructures were completed. Initially two faculties (Faculty of Theology and Islamic Studies, Faculty of Humanities and Social Sciences) with four departments (Al-Quran, Dawah, Accounting, Management) were established and 300 students were enrolled. In 1987, two more departments (Sharia and Economics) were established. On December 28, 1988, while the infrastructure development and academic activities were in full swing, the university was again shifted to Shantidanga-Dulalpur (Kushtia-Jhenidah).