[5][6] In December 2023, Professor Sufyan Tayeh, the university's president and a prominent scientist, was killed along with his family in an Israeli air strike on Jabalia refugee camp.

However, travel restrictions after the Israeli occupation of the West Bank and Gaza Strip in 1967, economic problems, and quotas on the admission of Palestinian students to Arab universities changed this situation.

[11] Initiatives by local elders and community leaders were set in motion to establish higher education institutions, often on the grounds of existing schools and colleges.

[11] Sheikh Mohammad Awwad, then head of the Gaza Chapter of the Azhari Institute, led the Islamic University's founding committee.

[11][14] In February 2007, during the height of fighting between Hamas and Fatah, the dominating party in the Palestine Liberation Organization (PLO), the Palestinian Authority (PA) Presidential Guards and Fatah militiamen stormed the Islamic University campus using mortars and rocket-propelled grenades, setting the library building and parts of the computer center and science building on fire.

[5][21] The university's Gaza City campus was bombed and its buildings destroyed on the night of 10 October 2023 during the opening week of the 2023 Israel–Hamas war.

"[26] Samar Sabih, considered Hamas's first female bombmaker, was recruited while studying at IUG in 2003, according to Israeli security officials.

"[28] The Washington Institute for Near East Policy wrote in a piece on USAID funding of organisations with possible links to terrorism that connections exist between the university and Hamas.

Roy also wrote: "logic maintains, institutional clients become automatically linked to Hamas and constitute a base of support for political Islam.

"[32] In 2010, journalist Thanassis Cambanis wrote in the Boston Globe that the university was "the brain trust and the engine room of Hamas".