The Institute of Animal Genetics had its origins in 1911 when the Development Commissioners formulated an ambitious scheme for the encouragement of agricultural education and research. A committee was established to advise them of the best means of contributing to the study of animal breeding problems. Because at that time there were many well-known researchers working at the University of Edinburgh, such as James Cossar Ewart (1851-1933), professor of Natural History, physiologist Francis Hugh Adam Marshall (1878-1949) and Arthur Dukinfield Darbishire (1879-1915), lecturer in Genetics and Animal Breeding, it was evident that Edinburgh would become the centre for research in animal breeding.

In 1913 the University of Edinburgh and East of Scotland College of Agriculture Joint Committee on Research in Animal Breeding was formed. The Joint Committee submitted a proposal to the Commissioners and it was agreed that a scheme of work monitored by a scientific director be drawn up. With the advent of the First World War the plans had to be temporarily put to one side, particularly after the two potential candidates for the Institute Director were removed from the scene (Darbishire had died in 1915 and F.H.A Marshall had departed for Cambridge). It took a further four years before the project would finally get off the ground under the direction of Francis Albert Eley Crew (1886-1973). Crew, a charismatic man and qualified medic, whose childhood hobby of breeding bantams had led to a fascination with the study of heredity, held at that time an Assistantship in the Natural History Department of the University of Edinburgh. The centre that was founded was known initially as the Department of Research in Animal Breeding, although over the next few years it became known as the Department of Animal Genetics and, by around 1931, the Institute of Animal Genetics. The Department was managed by the Joint Committee and funded by the Development Commission, the Board of Agriculture for Scotland and the University of Edinburgh, although it would be some years before the Department became part of the University's structure.

In 1924 the Department moved from its location in High School Yards out to the then new Chemistry Building on the King's Buildings campus, and also gained seven acres of grassland which provided an opportunity for maintaining a few farm animals under direct control for experimental purposes. A year later the Department was expanded thanks to various endowments and donations. These benefactions allowed for the creation of the Buchanan Chair of Animal Genetics in 1928 (to which Crew was appointed), the foundation of a new building on the Kings Buildings site (which opened in 1930), as well as providing additional funds for research. A further result was that the Joint Committee was disbanded and the Department became an integral part of the University with a new Animal Breeding Committee advising on the management of the Department. Under Crew's leadership, research in the fields of reproductive physiology and genetics was encouraged to develop side by side as a facet of scientific animal breeding. In 1929 Crew and Bertold Wiesner (1901-1972) created a Pregancy Diagnosis Laboratory, which tested samples sent by medical practitioners or private individuals from all over the UK. This Laboratory was the first of its kind in Britain, and ultimately was to transfer to the Usher Institute with Crew.

Professor Crew was also successful in securing the Institute as the location for the Imperial (later the Commonwealth) Bureau of Animal Genetics, which was established in 1930 to disseminate information through reviews and bibliographies, with Animal Breeding Abstracts being first published in 1933. The pre-war period concluded with the staging of the 7th International Congress of Genetics in Edinburgh in September 1939 which was unfortunately curtailed by the outbreak of war. Many of the staff at the Institute, including Crew, were immediately called up for war service and the Institute was placed in the charge of Alan William Greenwood (1897-1981), head of the Poultry Section.

After the war, Professor Crew returned to the University of Edinburgh, but not to the field of genetics, having accepted the Chair of Public Health and Social Medicine. In 1945 the Agricultural Research Council (ARC) formed the National Animal Breeding and Genetics Research Organisation (NABGRO, later ABGRO, then ABRO), and it was decided that the genetics laboratory would be located within the Institute (the overall head, R.G White, was based in Wales). Conrad Hal Waddington (1905-1975) was appointed head of the genetics section and also took up the University's Buchanan Chair of Animal Genetics. Alan Greenwood, who had run the Institute during Crew's absence, left to become the first Director of the Poultry Research Centre in 1947.

Following the retirement of Robert G. White as Director of ABGRO in 1950, Hugh P Donald (1908-1989) was appointed co-director with Waddington, each in charge of one section of the Institute; Animal Breeding and Animal Genetics respectively. The situation was further complicated by the fact that the head of the Genetics Section was not employed by the ARC but by the University of Edinburgh. This was rectified in 1951 when Donald was appointed Director of the renamed Animal Breeding Research Organisation (ABRO), while the Animal Genetics Section under Waddington became a separate ARC funded group within the University Department. Under this arrangement, the 'Institute of Animal Genetics' passed out of existence in its previous format, although the name was retained to denote the building and became a by-word for the bodies it contained. It was eventually designated the ARC Unit of Animal Genetics in 1957. In 1968, Waddington took up the position of Einstein Professor at the State University of New York at Buffalo, and the administration of the Unit was taken over by the Deputy Director, Douglas Scott Falconer, who would later take over as Director. The Unit continued until Falconer's retirement in 1980 when it was disbanded. The Genetics Building was renamed the Crew Building and is currently home to the University's School of GeoSciences.