The idea of establishing a Textile Institute of world fame was conceived by a group of visionary industrialists in 1954. To realize this idea the Government of Punjab joined hands with the leading textile industrialists to form an Institute of Textile Technology in Faisalabad (then Lyallpur) and provided sixty-two acres of state owned land free of cost. Kohinoor Industries, Colony Textile Mills, Dawood Foundation and Lyallpur Cotton Mills provided funds to the tune of Rs.2.5 Millions, which were utilized for the construction of building and provision of other infrastructure. The Government of U.K. provided the bulk of equipment and machinery, along with the services of experts under Colombo Plan. Field Marshall Muhammad Ayub Khan, the then President of Pakistan, laid the foundation stone of the Institute, on the 12th of October 1959.

A Board of Trustees, with the Minister of Industries as chairman and nominees of the donor companies as members was constituted to manage the affairs of the Institute. In order to meet the recurring expenses of the Institute a Cess was levied by the government on the Textile industry of Pakistan. Later, in 1965, the Institute was granted affiliation by the University of Engineering & Technology, Lahore, and it was renamed as “National College of Textile Engineering”. The first batch of graduate engineers was passed out in 1966. In 1973 the administrative control of the Institute was transferred to Federal Government and it was renamed as “National College of Textile Engineering”.

In 1992, the college received a comprehensive assistance worth 650 million yen from the Japanese Government, through JICA program, in the form of latest machinery and equipment for all the departments of the Institution. The college was upgraded as National Textile University on 15 November 2002 through promulgation of Ordinance No. CXXIV of 2002 by the President of Islamic Republic of Pakistan.

Ever since its inception National Textile University has been the premier Institute of textile education in the country, meeting the technical and managerial human resource needs of almost entire textile industry of Pakistan. It always retained a close relationship with the industry and industrialists.