Yunnan University was founded in 1922, when it was Private Donglu University. In 1934, it was renamed as Provincial Yunnan University and in 1938 renamed as National Yunnan University. It is one of the earliest comprehensive universities in Southwest China. In 1937, when Xiong Qinglai, the well-known mathematician and educationist, served as the president, a large number of renowned scholars were employed to teach at the university, which laid foundation for its development and profound academic tradition, leading to the first glorious era in the history of Yunnan University. In 1940s, Yunnan University developed into one of the famous large universities in China with international influence and offered courses in arts, law, science, engineering, agriculture and medical science. In 1946, Yunnan University was listed by Concise Encyclopedia Britannica as one of the 15 world's famous universities in China.

In 1950s, when Yunnan University was under the direct administration of the Ministry of Education, the national faculty restructuring was introduced. Some important featured departments, like aeronautics, civil engineering, law, and railway spun off from Yunnan University and merged into colleges like Beijing Aeronautical and Astronautical Institute, Sichuan University, Southwest University of Political Science and Law and Changsha Railway Institute. Departments like engineering, medical science and agriculture were also divested from the University and gradually developed into today's Kunming University of Science and Technology, Kunming Medical University, Yunnan Agricultural University and Southwest Forestry University, etc. In 1958, the administrative management of Yunnan University was delegated from the central Ministry of Higher Education to Yunnan province. In 1978, it was ranked by the State Council as one of the 88 national key universities.

Since the reform and opening-up, Yunnan University has made huge progress. In 1996, it was among the first universities to win the membership of "Project 211". In 2001, it was listed as one of the higher education institutions to be intensively supported in China's development of its western region. In 2004, it became a key university to benefit from focused support from the People's Government of Yunnan and the Ministry of Education. In 2006, all its 19 secondary indicators were A-graded and it was rated as an excellent college for undergraduate education by the MOE. In 2012, it became a participant of the Central-western Chinese Universities Capacity-building Project, and a participant in the Central-western Chinese Universities Comprehensive Capacity Promotion Project.