The proposal to establish an institute to pursue the research and preservation of Pali language was made by the then Union Finance Minister and current President of India, Sri Pranab Mukherjee when he visited Kalaburgi in 2011. Subsequently, the announcement to establish the Pali Language Research Centre at Kalaburgi was made by him in the budget speech of 2012-13.

Following the announcement in the Union Budget, the Rashtriya Sanskrit Sansthan was appointed as the nodal agency by the Ministry of HRD for coordinating the implementation of this proposal and a Memorandum of Understanding was signed on the 30th of March, 2013.

Subsequent to the announcement of the establishment of the Pali Language Research Institute in the Union Budget of 2012-23, the Siddhartha Vihar Trust requested assistance from the Karnataka Government for the development of this institute. This request of the Siddhartha Vihar Trust was accepted by the Karnataka Government and support was announced for the institute in the state budget 2013-14 by Sri Jagadish Shettar, then Chief Minister of Karnataka.

The International Institute of Pali, Sanskrit and Comparative Philosophy was established on 14th February, 2014 as a public trust with the Deputy Commissioner, Kalaburgi representing the Karnataka Government as the author of the trust along with the Chairman, Siddhartha Vihar Trust. Other trustees include the Commissioner Public Instruction, Vice Chancellor of Rashtriya Sanskrit Sansthan and two trustees nominated by the Siddhartha Vihar Trust.