It was established in March 1912 by a group of former Tsinghua faculty members led by Hu Dunfu, and became one of the most reputable private universities in China.

After the founding of the People's Republic of China, the Chinese Communist Party government closed Utopia along with many other private universities in 1952.

[2] In summer, a group of eleven Chinese faculty members at Tsinghua, most of whom were from the Jiangnan region, established the Lida Society (立達學社) to promote education in China.

Hu Dunfu was the head of the society, and other members included Ping Hailan (平海瀾), Zhu Xiangwan (朱香晚), and Gu Yangwu (顧養吾).

[3] In November 1911, the eleven members of Lida resigned from Tsinghua after having a disagreement with the American administrators at the college, and left Beijing for Shanghai.

[4] Hu Dunfu, the first dean of Tsinghua who had graduated in mathematics from Cornell University, insisted that students of Tsinghua should study more science and engineering, but American teachers, backed by the American ambassador, maintained that they should focus more on the English language and the literature, history and geography of America.

After the Japanese occupied the Chinese-held areas of Shanghai, Utopia was forced to relocate to the French Concession.