The Institute was established at Brown University in 1993 through an anonymous gift of $5 million. Several month later, a $50-million gift — part of Ambassador Walter H. Annenberg's $500-million Challenge to the Nation to improve public education in America — enabled the fledgling Institute to considerably expand the scope of its work. In appreciation for the Ambassador's gift, the Institute was renamed in his honor.

Under its first director, Dr. Theodore R. Sizer, founder and chairman of the Brown-based Coalition of Essential Schools, the Institute built upon the work of the Coalition but with a broader mission: to support sustained, focused efforts to enhance the quality of learning of children and youth across the country.

Following Dr. Sizer's retirement in 1996, a national search was undertaken for a new director. During the search period, Dr. Vartan Gregorian, then-president of Brown University, served as acting director, and Ramón Cortines, a member of the Board of Overseers, as interim director.

In October 1998, Dr. Warren Simmons, then director of the Philadelphia Education Fund, was appointed executive director of the Institute. Under Dr. Simmons’s leadership, the Institute adopted its current mission statement, concentrating on the critical need to improve schooling in the nation’s urban communities.

In 2000, the Institute opened a small office in New York City in conjunction with the launch of its Task Force on the Future of Urban Districts. In 2001, the Institute moved its Providence operations to permanent headquarters on Benefit Street, just off the Brown campus.

The inaugural issue of the Institute’s quarterly journal, Voices in Urban Education (VUE), was published in the spring of 2003.

The Institute collaborated with the Education Department and other units within Brown University in 2005 to establish a Master’s Program in Urban Education Policy. In the summer of 2006, the first cohort of students entered the program.

In 2006, the Institute's programs and staff were expanded with the assimilation of the Community Involvement Program, formerly affiliated with the Steinhardt School of Education at New York University. In 2007, the Institute opened an expanded New York office in the Woolworth Building in lower Manhattan.