In 1881, George E. Davis proposed the formation of a Society of Chemical Engineers, but instead the Society of Chemical Industry (SCI) was formed.
The First World War required a huge increase in chemical production to meet the needs of the munitions and its supply industries, including a twenty-fold increase in explosives.  This brought a number of chemical engineers into high positions within the Ministry of Munitions, notably K. B. Quinan, Frederic Nathan and Arthur Duckham.
The increased public perception of chemical engineers renewed the interest in a society, and in 1918 John Hinchley, who was a Council Member of the SCI, petitioned it to form a Chemical Engineers Group (CEG), which was done, with him as chairman and 510 members. In 1920 this group voted to form a separate Institution of Chemical Engineers,which was achieved in 1922 with Hinchley as the Secretary, a role he held until his death. The inaugural meeting was held on 2 May 1922, at the Hotel Cecil, London.
Despite opposition from the Institute of Chemistry and the Institution of Civil Engineers, it was formally incorporated with the Board of Trade on 21 December 1922 as a company not for profit and limited by guarantee. The first Corporate meeting was held 14 March 1923 and the first Annual General Meeting on 8 June 1923: Arthur Duckham was confirmed as President, Hinchley as Secretary and Quinan as Vice-President.  At this time it had about 200 members.  Nathan was the second President in 1925.
The American Institute of Chemical Engineers, which had been founded in 1908, served as a useful model. While suggestions of amalgamation were made and there was friendly but limited contact, the two organisations developed independently.
In 1926 an official Seal of the Institution was produced by Edith Mary Hinchley, wife of John Hinchley.
The same year the Institution set the first examinations for Associate (i.e. professionally qualified) membership, bringing it into line with the Civil and Mechanical Institutions. In addition to four set examinations of three hours each, there was a Home Paper requiring the candidate to gather information and data and design a chemical plant, accompanied by drawings and a written design proposal within a time limit of a month.
In 1938 the membership passed 1000.
In 1939 the first courses were recognised as granting exemption from the examinations for Associate Membership, being Manchester College of Technology and of the South Wales and Monmouthshire School of Mines.  Others followed in subsequent years.
In 1942 Mrs Hilda Derrick (née Stroud) was the first female member, in the category Student, taking a correspondence course in chemical engineering during the war.  She was active in promoting the Institution and profession to women.
In 1955 Canterbury University College, New Zealand,  and University of Cape Town, South Africa, were the first overseas institutions to have their qualifications recognised.
On 8 April 1957 the IChemE was granted a Royal Charter, changing it from a limited company to a body incorporated by Royal Charter, a professional institution like the Civil and Mechanical ones, with HRH Prince Philip, Duke of Edinburgh as patron, a role he continued for over 63 years.
In 1971, the membership grades were changed: Associate became Member and Member became Fellow.
In 1976 the Institution moved its Headquarters from London to Rugby.