The American University in Cairo was founded in 1919 by American Missionaries, but quickly moved away from missionary endeavors in favor of being a strictly educational institution.

Initially, AUC was intended to be both a preparatory school and a university. The preparatory school opened on October 5, 1920, with 142 students in two classes that were equivalent to the last two years of an American high school. The first diplomas issued were junior college-level certificates given to 20 students in 1923. At first an institution only for males, the university enrolled its first female student in 1928, the same year in which the first university class graduated with two B.A.'s and one B.S. degrees awarded. Master's degrees were first offered in 1950. AUC's high school division, known as the Lincoln School, was discontinued in 1951.

In 1960, AUC enrolled approximately 400 academic students. By 1969 the university had more than tripled its degree enrollments to over 1,300 students, 450 of whom were pursuing graduate studies. Since then academic program enrollments have grown to 5,022 students (Fall 2001), with 749 students at the master's degree level. Adult education expanded simultaneously and now serves approximately 30,000 individuals each year in non-credit courses and contracted training programs.

AUC is not a branch of the American University in Washington DC or any other American University. Its Board of Trustees is located in New York City were the university maintains administrative offices.