The Institute was established by the Govt. of India as National College of Physical Education in August 1957, the centenary year of the War of Independence, and located at Gwalior, where Rani Lakhmibai of Jhansi, a valiant heroine of the war, had laid her life. The Institute was named after her as a tribute to her role in the glorious struggle. The main purpose of establishing this institute was to up - grade the status of physical education by offering degree and post-graduate course for the first time in the country. Bachelor's degree programme was started in 1957, a two year Master's Degree course was introduced in 1963. In 1980 it became the first institution in India to offer one year degree programme of Master of Philosophy (Physical Education).

The Institute started as an affiliated college of the Vikram University, Ujjain and then came to the fold of Jiwaji University, in 1964. In recognition of its unique status and character and to facilitate its further growth, the college was conferred the status of an Autonomous College of Jiwaji University, Gwalior in 1982.

In further recognition of the educational services rendered by the Institute in the field of Physical Education, sports and research it was decided by the Govt. of India, Ministry of Human Resource Development under UGC Act of give it the status of at Deemed to be a university w.e.f. September 1995. The Institute is the only Deemed to be a University in the field of Physical Education and Sports in the country.

The duration of the Bachelor’s Degree course, known as B.P.E. ( Bachelor of Physical Education) was initially for 3 years. To bring in line with the directives of NCTE and also similarity with some other Professional Degree Courses, the duration of the course has been extended from 3 years to 4 years with effect from the ensuing Academic Session i.e. 2003-2004 onward.