The school was founded on 14 September 1947, a month after the Partition of India which created Pakistan. Muhammad Hasan named the university for Deobandi scholar Ashraf Ali Thanwi, in recognition of his support for the creation of an independent homeland for British India's Muslims. It was founded in a quadrangular three-storied building in Nila Gumbad Anarkali at the centre of the thickly populated area of Lahore. 120 kanals of land between Canal Road and Ferozepur Road were purchased on 28 March 1955, and construction of a new school building began with the laying of the foundation stone of a mosque. In 1957 the majority of staff and students shifted to the new campus, and teaching of hadith courses began under Idress Kandhalvi in 1958. Today the main campus comprises a mosque, a large administrative and teaching block, two boarding houses (one for local students and one for foreign), a hospital, and residences for faculty and employees. His sons, Mufti Muhammad Ubaidullah, Maulana Abd-ur-Rahman Ashrafi (late), Maulana Fazl-ur-Raheem and Mufti Hasan's grandson Maulana Hafiz Arshad Ubaid manage the university matters.
