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After witnessing the success of the Open University in the United Kingdom, AIOU was established as a public university in 1974. [4] AIOU is noted for its cost-effective policy to provide higher and lifelong education to people learning from their homes and places of work at a minimum cost through a specialized fund managed by the government.

AIOU is one of the world's largest institutes for distance learning, and the largest distance learning institute in Pakistan. It offers SSC (secondary schooling) to PhD level education to students in Pakistan. [6] AIOU provides e-learning facilities through virtual classrooms as well as providing interactive online study material.

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