Muhammad Hasan Amritsari named the university for Deobandi scholar Ashraf Ali Thanwi, in recognition of his support for the creation of an independent homeland for British India's Muslims.

It was founded in a quadrangular three-storied building in Nila Gumbad Anarkali at the centre of the thickly populated area of Lahore.

In 1957 the majority of staff and students shifted to the new campus, and teaching of hadith courses began under the famous scholar Muhammad Idris Kandhlawi in 1958.

Today the main campus comprises a mosque, a large administrative and teaching block, two boarding houses (one for local students and one for foreign), a hospital, and residences for faculty and employees.

Main branch of Jamia Ashrafia is located on Ferozpur Road, Lahore covering 120 kanals area.