IAI's main focus is engineering, aviation and high-tech electronics, though it also manufactures military systems for ground and naval forces.

[2] In 1959 Bedek began manufacturing its first aircraft, a V-tailed twinjet trainer of French design, the Fouga CM.170 Magister, locally called Tzukit (monticola).

The Nesher was followed by the IAI Kfir ("lion cub"), which was developed as a result of Israel's need for adapting the Dassault Mirage III to the specific requirements of the Israeli Air Force.

The Kfir's first recorded combat action took place on 9 November 1977, during an Israeli air strike on a training camp at Tel Azia, in Lebanon.

[5] The IAI Kfir has been exported to Colombia, Ecuador, Sri Lanka and was leased to the US Navy and the US Marine Corps from 1985 to 1989, to act as adversary aircraft in dissimilar air combat training.

Work on an improved Westwind – named the Astra – began in the late 1970s[7] by stretching the fuselage and designing a new swept wing, with the first prototype flight occurring on 19 March 1984.

The unit had 4,000 employees by the mid-1980s and overhauled a huge range of aircraft, from propeller-driven trainers to airliners; including big civil aviation programs, such as conversion of Boeing 747s to freighters.

In early 2006, ProJet development stalled after a major undisclosed US OEM pulled out of the program due to unspecified reasons.

[14] The company was working with the Aviation Technology Group on a military trainer version of the ATG Javelin, a fighter style personal jet.

[15] In the late 2000s IAI developed the follow-on EL/W-2085 system which is installed on heavily modified Gulfstream G550 aircraft and which besides serving in the IAF were also sold to Singapore and Italy.

On 6 November 2006, IAI changed its corporate name from "Israel Aircraft Industries Ltd." to "Israel Aerospace Industries Ltd."; to more accurately reflect the current scope of the firm's business activities, which includes not just aircraft, but also systems, satellites and launchers, as well as maritime and ground systems.

On 13 April 2009, the Moscow Times reported that the Russian Defense Ministry had signed an agreement with Israel Aerospace to purchase $50 million in pilotless drone aircraft.

[17] On 4 September 2012, the Gulfstream G280, a new twin-engine business jet built by IAI, received full certification from the Federal Aviation Administration (FAA).

[22] In July 2021, IAI Aviation Group has agreed to establish a passenger to freighter conversion site to convert the B737-700/800 with Atitech (Italy) in Naples.