The Institute was set up in May 1945 and named after General Władysław Sikorski (1881-1943), the commander-in-chief of the Polish Army and Prime Minister of the Polish government in exile, as the General Sikorski Historical Institute. It was created after an agreement between Helena Sikorska, General Sikorski's widow, and the organizing committee, which included senior commanders of the Polish Army and members of the government in exile. To avoid any political pressure from the British government and the communist regime in Warsaw, the Institute was established as a trust and later received charity status. The Institute acquired its present name in 1965 when the General Sikorski Historical Institute merged with the Polish Research Centre. In 1988 the Institute also incorporated the Polish Underground Movement Study Trust. The PISM consists of the Archives and the Museum, which also includes the photographic, film and sound archives. The archival holdings pertain to the Polish war effort in the Second World War and contain files created by the Polish government, Polish Armed Forces, resistance movement, individuals and institutions.

During the period of communist rule in Poland, the role of the Institute was safeguarding Polish history and culture. It was also a beacon for free and unfettered access to Polish archives and education. Through its research, publications and exhibitions, the PISM contested the propaganda and historiography of the communist regime. After 1989 that role has changed. The Institutes remains probably the single most important source of Polish history in the Second World War, definitely outside of the borders of Poland. It cooperates with the Royal Air Force Museum, the Imperial War Museum in London, Polish state archives, the Polish Army Museum in Warsaw, the Polish Navy Museum in Gdynia, the Polish Library in Paris and the Polish Institute in Rapperswil in Switzerland.