The Institute was founded in March 1944 to perpetuate the memory of the great savant Prof.Sastri. Under the Chairmanship of Dr.A.Lakshmanaswami Mudaliar, the then Vice-Chancellor of the Madras University, the scholar-friends , students and admirers started the venture. It was formally inaugurated on 22nd April 1945 by Sri S.V.Ramamurthy, I.C.S., Adviser to the Governor of Madras Presidency.
Renowned personalities like Rt.Hon ble V.S.Srinivasa Sastriar, Dr.Sir.S.Radhakrishnan, Sir C.P.Ramaswamy Iyer, Sri S.Sathyamurthy, Prof.M.Hiriyanna, Dr.C.Kunhan Raja, Sri S.Vaiyapuri Pillai, Sri K.Balasubramania Iyer and Dr.A.Lakshmanaswami Mudaliar were actively associated with the Institute as Presidents, Secretaries and members. Dr.V.Raghavan Sanskrit scholar of international repute, was the founder-secretary and mainstay of the Institute.
The Institute was at first housed in the Sri Chandrasekharendra Saraswathi Mandapam in the Sanskrit College premises. This was erected earlier for the special purpose of stay and puja of the H.H.Sri Chandrasekharendra Saraswathi Swamigal of Kanchi Kamakoti Peetham whenever he visited Madras.
Later with private donations and Govt. grants, the Institute now possesses an area of about 7000 sq.ft. having three different buildings with ground floors and first floors.
In this regard a sizeable amount was collected and donated by Swami Dayananda Saraswathi who gave lectures in 1992 in aid of Sanskrit College and the Institute. The Institute remains ever grateful to the Swamiji for his thoughtful and timely help.