The Post Graduate Institute of English (PGIE) was established at the Open University of Sri Lanka by the University Grants Commission under the Universities Act No 16 of 1978. The establishment of this institution by the UGC underscored the importance of English as a language of academic and national importance. The PGIE was, in fact, set up as a result of far- reaching reforms that sought to improve the quality and scope of education in this country. One of the major thrusts of these reforms was the strengthening of English language teaching and learning so that educational and employment opportunities could be extended among all levels of Sri Lankan society, and also a recognition of the fact that neglect of English and English teaching over two decades since the 1960s had led to scholastic impoverishment across all branches of learning. This neglect had affected in particular, university and tertiary level students and thus impinged on the development of the country as a whole. In 2004 therefore, the Standing Committee on English, a committee  that included Heads of  university English Units, proposed that an institution should be set up to enhance  the  development of English teachers and to be, among other things,  national centre of excellence for training and professionalism in English Teaching.

The PGIE was therefore established in December 2005 at the Open University of Sri Lanka, to take advantage of the mode of Distance Education that this university practiced. It was felt that using Distance Education techniques would permit the institution to reach out to teachers across the island in a manner that was not possible through conventional means.
In 2006, Professor Ryhana Raheem, Professor of English at the Open University was appointed founder Director of the PGIE.