[7] The construction works of KSY started in 1954 under supervision of the East Pakistan Industrial Development Corporation (EPIDC)[8] with the technical support of M/s.

After completion of works, It was commissioned on 27 November 1957, with the objective to build and repair ships of various clients, for defense, coast guard, oil company, ports and manufacture engineering parts to support other industries.

[10] In January 2005, Bangladesh Navy complained to Prime Minister Khaleda Zia that government organizations were not giving their contract to Khulna Shipyard.

[10] Member of parliament, Mahbubur Rahman, speculated that the reason for that was government officials would not get kickbacks if they awarded the contract to Khulna Shipyard.

[12] [13] Khulna Shipyard provided six patrol crafts, designed by South African Icarus Marine, to Bangladesh Coast Guard in February 2022.