Founded in 1971 as Hong Kong Shue Yan College (香港樹仁學院) by Henry Hu and Chung Chi-yung, it was unilaterally recognised as the first private university by the order of the Chief Executive on 19 December 2006.

However, her husband, Dr Hu, suggested founding a university instead and invested his savings from his work as a barrister in it, purchasing a three-story house at Sing Woo Road, Happy Valley as campus.

They were concerned that provision for tertiary education in Hong Kong was made for less than 2% of the relevant age group and also that the Cultural Revolution in mainland China would undermine traditional Chinese values.

The government of Hong Kong at the time was interested in the prospects of an independent, private liberal arts school, and granted a piece of land at Braemar Hill to construct a permanent campus in 1978.

Shue Yan's unrelenting position to offer four-year programmes meant that it had to operate as a truly private institution, without any government funding.

In January 2007, the HKSAR government offered a one-time grant of HKD200 million (although possibly less) to establish a general development fund for SYU.

The SYU campus is situated on Braemar Hill on Hong Kong Island, and offers a view of the Victoria Harbour.