In 1947 Prof. Burkard from the Institute for Meteorology and Geophysics of the Karl Franzens University Graz installed an ionosonde to measure the electron density profiles of the electrically conductive upper layers of the atmosphere. This laid the foundations of ionospheric research.

From 1966 artificial satellites were photographically recorded at the Observatory Graz-Lustbühel by Prof. Rinner, the Chair of Geodesy II of the Technische Hochschule Graz.

In 1969 Prof. Riedler became the head of the newly-founded Institute of Communications and Wave Propagation of the Graz University of Technology. The Norwegian Research Council invited the Institute to develop the first Austrian instruments for space research purposes which were launched on 26 November 1969 on board of a sounding rocket (see illustration) from the launch site in Andøya, Vesterålen Islands, Norway. This was the first launch of Austrian instruments into space.

On 24 April 1970 the Austrian Academy of Sciences decided to establish the Space Research Institute. It started its activities at different departments spread all over Austria (Graz, Innsbruck, and Vienna).

In 1974/75 the Institute concentrated its activities in three departments in Graz. Prof. Burkard was appointed Managing Director and Prof. Riedler became Deputy Director.

In 1982 Prof. Bauer followed Prof. Burkard as Department Head.

In 1984 Prof. Riedler was appointed Managing Director.

In 1990 Prof. Sünkel followed Prof. Rinner as Department Head.

In 1999 Prof. Rucker followed Prof. Bauer as Department Head.

In 2001 Prof. Baumjohann followed Prof. Riedler as Department Head. Prof. Sünkel was appointed Managing Director.

In 2004 Prof. Baumjohann was appointed Managing Director.

In 2015 the three departments were dissolved and the institute was restructured into four research fields.

In 2019 the four research fields were divided into six research groups.

In 2021 Prof. Helling was appointed as the successor to Prof. Baumjohann as managing director and two new research groups were set up.

IWF owes its high reputation to a large extent to the sophisticated instruments, which have been developed and built for numerous space missions since the eighties. ESA, NASA, and other organizations invite institutes worldwide to apply for participation in such missions. Many IWF proposals have been accepted.