In 1952 the Arnold Engineering Development Center opened in Tullahoma, with huge wind tunnels and related equipment to test missiles, supersonic aircraft, and airplane parts and models. The original recommendation for the creation of a testing facility had included a proposal for associating it with a civilian academic university program. Numerous efforts were made, while AEDC was under construction, to develop a viable concept for an education and research institute that would exist in a collaborative relationship with AEDC. In 1952 UT began offering undergraduate courses at AEDC for Arnold Engineering personnel. An Institute of Flight Science was strongly recommended in 1952 to foster graduate programs, lectures and symposia programs, and student research in the aeronautical sciences, but the institute was not implemented. In 1956 the air force made contractual arrangements with UT to establish an AEDC graduate study program for center employees, using office and classroom space provided by the air force and offering courses in person or by “electrowriter.” Dr. Joel Bailey was the initial director of the UT effort, followed by Dr. Robert F. Young.
In 1958 Dr. B. H. Goethert proposed to the air force and the State of Tennessee that a Tennessee Aerospace Institute be located near AEDC. In 1963 the Tennessee legislature authorized UT’s creation of a separate graduate space institute offering master’s and doctoral degrees. UTSI began offering graduate course work at the master’s and doctoral levels in aerospace engineering in 1964 as a branch of the College of Engineering. In 1964 the institute originally held its classes and had its offices in the Arnold Center, moving in November 1965 to its new facility, a $1 million building constructed with funds appropriated by the legislature and located on 365 acres of land declared surplus by the air force and formally transferred to UT by the Department of Health, Education, and Welfare on January 29, 1964. Governor Frank Clement received the land for the university. Dr. B. H. Goethert was named the first dean. The first UTSI building, the Frank G. Clement Administration Building, was dedicated on July 11, 1966. UTSI was accredited by the Southern Association of Colleges and Schools in December 1967.
In 1976 the Tennessee General Assembly approved placing UTSI on an individual budget separate from that of the general University of Tennessee. That first budget was set at $750,000. In 1989 UTSI was separated from the structure of the campus in Knoxville, and its chief officer was initially designated a vice president and, subsequently, an associate vice president. In June 1993 UTSI awarded its degrees on its own campus for the first time. Prior to that time, UTSI degrees had been awarded in commencements in Knoxville.
In the 1999 reorganization of the university, the Space Institute, the Knoxville campus, the Agricultural Institute, and the Medical Units at Memphis were combined into a single institution—the University of Tennessee. In 2002 the administrative structure of the Space Institute was changed by the board of trustees at its December meeting to have the institute report to the Knoxville campus rather than to the vice president for research and information technology. Since 2008 the CEO of the Space Institute (since 2009, an executive director) has reported to the chancellor of the Knoxville campus.