In the mid 1960s, a proposal to set up an Institute under the name of "Institute for Planning and Administration of National Economy" was forwarded to Pandit Jawahar Lal Nehru, Prime Minister of India and Chairman, Planning Commission, Government of India. A study tour was undertaken under Dr. M. K. Chaudhuri's commission during 1964-65 to acquire first hand knowledge about the working of similar institutions in Europe. A working paper on Regional Planning was circulated under the name of "Indian Institute of Planning" in 1969.

After resigning from Professorship at IIM (Indian Institute of Management) Bangalore, and after having been a Professor at XLRI Jamshedpur, Dr. Chaudhuri took over as Research Professor and founder Director of IIPM in 1973. Incidentally, Dr. Chaudhuri has also been the founder director of management courses at IMT Ghaziabad. At IIPM, the first residential full-time Post-Graduate Diploma Programme commenced on 12th August 1974, with students selected through admission tests and interviews held in New Delhi, Calcutta, Bombay & Bangalore. IIPM pioneered the all India admission procedure by holding admission tests and interviews in 15 centers, namely, Ahmedabad, Bangalore, Bhopal, Bhubaneshwar, Mumbai (Bombay), Kolkata (Calcutta), Chandigarh, New Delhi, Guwahati, Hyderabad, Jaipur, Lucknow, Chennai, Patna & Trivandrum. The institute has, through the experiences of the past decades, accumulated a vast and massive base of knowledge and learning. It has grown in the areas of activities, at the same time maintaining a close connection with various competencies that have working synergies with the core management education area. IIPM's activities now range from education & rural development programmes to management consulting, public relations, marketing consulting, research, training & development, human resources consulting & media consulting.