It was founded for the university by Egyptology and ancient history professor James Henry Breasted with funds donated by John D. Rockefeller Jr.

The institute also publicly exhibits an extensive collection of artifacts related to ancient civilizations and archaeological discoveries at its on-campus building in Hyde Park, Chicago.

According to anthropologist William Parkinson of the Field Museum, the ISAC's highly focused "near Eastern, or southwest Asian and Egyptian" collection is one of the finest in the world.

[1] In the early 20th century, James Henry Breasted built up the collection of the university's Haskell Oriental Museum, which he oversaw along with his field work, and teaching duties.

Fundamental to the implementation of his plan was a research trip through the Middle East, which Breasted had optimistically suggested was ready to receive scholars again after the disturbances of the war.

[3] The institute is housed in an unusual Art-Deco/Gothic building at the corner of 58th Street and University Avenue, which was designed by the architectural firm Mayers Murray & Phillip.

[9] The institute's new logo features a lotus flower, which is found in ancient Assyrian, Mesopotamian, and Egyptian art, as well as being a decorative motif on the ISAC building.

The building's upper floors contain a library, classrooms and faculty offices, and its gift shop, the Suq, also sells textbooks for the university's classes on Near Eastern studies.

In addition to carrying out many digs in the Fertile Crescent, institute scholars have made contributions to the understanding of the origins of human civilization.

[12] In 2006, the Oriental Institute was the center of a controversy when a U.S. federal court lawsuit sought to seize and auction a valuable collection of ancient Persian tablets held by the museum.

The proceeds were to compensate the victims of a 1997 bombing in Ben Yehuda Street, Jerusalem, an attack which the United States claimed was funded by Iran.

[13] Each tablet is about half the size of a deck of playing cards and has characters of a dialect of Elamite, an extinct language understood by perhaps a dozen scholars in the world.