The Institute was born from the Commonwealth Institute of Technology, or CIT, a renowned university based in Cambridge, Massachusetts. Robert House attended it in his youth. During the Great War, a number of CIT personnel survived by taking refuge in the underground level of the campus. In 2110, the survivors and their descendants founded the Institute, an organization dedicated to furthering pre-War science.
In its early days, as the very first Generation 1 synths were being built, the Institute reached out to aid the people of the Commonwealth in rebuilding civilization, but mutual mistrust quickly doomed that enterprise. Soured on any further cooperation with the surface, the Institute withdrew into the shadows and adopted a new purpose: to abandon the Commonwealth to whatever fate awaits it and focus only on furthering their own vision of humanity's future - regardless of how many innocent lives they would have to sacrifice in the process.
The Institute's Advanced Systems department completed work on the Molecular Relay, a teleportation device, in the late 2180s to early 2190s. This allowed the Institute to completely seal itself off from the surface and begin expanding its facilities deeper underground. Whenever the Institute required materials that it could not produce itself, Generation 1 and 2 synths were teleported to the surface to scavenge, as well as to conduct experiments which would otherwise have required Institute personnel to leave the safety of the facility. These directives frequently led to conflict between the synths and the people of the surface, and instilled in the latter a lasting prejudice against synths and wariness of the secretive Institute.
By 2227, work on the third generation of synths, who would be indistinguishable from genuine humans, was well underway. The mercenary Conrad Kellogg was sent out to find Vault 111, where the Institute's scientists believed they could find a cryogenically-preserved pre-War human for their experiments. Kellogg returned with the infant Shaun, whose pristine DNA was used to finish the synths. The people of the surface first encountered a prototype Generation 3 synth in 2229, when it attacked the residents of Diamond City in what became known as the "Broken Mask incident." Existing prejudices against synths were compounded into paranoia; the people of the surface realized that the Institute could secretly kidnap and replace them with synths. While some scoffed at such a notion, this paranoia was in fact justified, as the Institute did begin using synths to infiltrate and even sabotage surface communities to further their own goals.
By 2287, the Institute was actively opposed by the Railroad, who viewed the third-gen synths as fully sapient and wished to liberate them from the Institute, as well as the Brotherhood of Steel, who viewed the Institute's work with synths as a return to the days of amoral pre-War corporations such as Poseidon Energy and Mass Fusion. This quickly led to a large conflict between the three factions.