The forerunner of the Institute of Botany, one of the oldest institutes of the Academia Sinica, was the Natural History Museum of the Academy, founded in Nanking in 1929. In the early period, it consisted of two sections, Zoology and Botany. In 1934, the Natural History Museum was renamed the Institute of Botany and Zoology and was directed by Mr. Chia-Chi Wang. The Botany section consisted of the Laboratory of Higher Plants and the Laboratory of Mycology and Plant Pathology, headed by Dr. Shu-Chun Teng. In the winter of 1936, the Laboratory of Phycology was established. During the Sino-Japanese War in 1937, the Institute of Botany and Zoology moved first from Nanking to Hengyang, then to Yangshuo, and finally to Chunking. At the Second Council Meeting of the Academia Sinica, held in Chunking in March 1944, a resolution was adopted that the Institute of Botany and Zoology become two institutes, the Institute of Botany and the Institute of Zoology. The Institute of Botany was thus formally founded on May 1 of the same year and was directed by Dr. Tsung-Lo Luo.

The main fields of specialization of the Institute of Botany included Higher Plant Taxonomy and Phycology. After WWII, the Institute of Botany was moved to Shanghai. At the end of 1947, the institute had established eight research laboratories: Higher Plant Taxonomy, headed by Dr. Chien Pei; Mycology, headed by Dr. Shu-Chun Teng; Phycology, headed by Dr. Ching-Chih Jao; Plant Physiology, headed by Dr.Tsung-Lo Luo; Forestry, headed by Dr. Shu-Chun Teng; Plant Morphology, headed by Dr. Fu-Hsiung Wang; Plant Pathology, headed by Dr. Ching-Chao Wei; and Cytogenetics, headed by Dr. Hshien-Wen Li.

In 1954, while the Central Government moved to Taiwan, Dr. Shih Hu, then President of Academia Sinica, invited Dr. Shien-Wen Li, a member of Academia Sinica and Research Fellow of the Institute of Botany, to prepare for the reestablishment of the Institute in Taiwan. It was a very difficult task; without a building, qualified research staff, and research equipment, Dr. Li had to settle for new employees from the Taiwan Sugar Research Institute and the National Taiwan University. Under the collaboration of these institutions, the research staff made the best use of the facilities and equipment of the institutions to conduct their research. One of the most remarkable research work at that time was the study of rice cytogenetics, led by Dr. Li.

Under the auspices of the National Council on Science Development, a biological laboratory building of Academia Sinica was begun in 1959 and completed in 1961. All research staff who worked at other institutions then joined together at Nankang, Taipei. In 1962, the Institute of Botany was formally reinaugurated in Taipei, under the directorship of Dr. Shien-Wen Li. At that time, the major fields of specialization included rice cytogenetics, radiation-induced mutation breeding, microbiology, and carbohydrate metabolism of bamboo shoots. The research budget, experimental instruments, and library facilities were given by the National Atomic Energy Agency, International Rice Research Institute and the U. S. Department of Agriculture. Since then, the Institute of Botany has grown gradually. Director Li also made it a long-term goal for reinforcement of the research staff. He invited many internationally renowned scholars and experts to be consultants. Scientific symposia were held in the summers of 1964 and 1965. In addition to our staff members, researchers from other institutions and universities benefited by attending the symposia. Furthermore, Director Li also selected some of our staff members to go abroad for advanced study.

After Dr. Li's retirement, in 1972, Dr. Tsung-Teh Kuo took over the directorship until 1977. Owing to the gradual growth of the research staff and the increasing number of fields of specialization, it became necessary to enlarge the research space and purchase equipment. Founded by the National Science Council, the Botany Building (, now the north wing of Dr. Shien-Wen Li Memorial Hall) was established in 1975. In November 1977, Dr. Hong-Pang Wu succeeded Dr. Tsong-Teh Kuo as director, and in November 1983, Dr. Ching-San Chen took over the directorship.

The expansion of research domains and growth of the research staff was such that the laboratories began to be overcrowded. In July 1981, Academia Sinica started its first five-year plan. To meet the demand of the expansion of genetic engineering and molecular biology and to improve the cramped conditions, a project to expand the research building was planned in 1982. The new building (now the east and south wings) was erected in 1985 and opened for use in the autumn the same year. Dr. Chang-Hung Chou took over the directorship in November 1989. A new greenhouse was completed in 1991.

When Dr. Chou's directorship expired in March 1996, Dr. Shang-Fa Yang became director of the Institute. Five months later (August 1996), Dr. Yang had the honor of being appointed vice-president of Academia Sinica, and Dr. Jei-Fu Shaw was appointed director of the Institute in November 1997 at the same time. In June 2003, Dr. Tuan-hua David Ho succeeded Dr. Shaw as director. After Dr. Na-Sheng Lin's interim directorship in 2008-2009, Dr. Anthony Huang served as the director in 2010-2012. Dr. Long-Fang O. Chen served as the interim director between January 2013 and September 2014, assumed office as the director in October 2014, and served as the interim director between October 2017 and September 2018. Dr. Shu-Hsing Wu served as the director since October 2018.