The National Management Foundation, the sponsoring body of the University, was incorporated in November 1984 and was granted a charter by the Government of Pakistan for establishing the University, in March 1985. Through this charter, the University was given the legal right to establish degree-granting programmes. 

The University has expanded rapidly over the past 15 years. It has two schools: The Graduate School of Business Administration and The School of Arts and Sciences. The Business School offers a two-year Master of Business Programme. It also provides executive development education through its Executive Administrator Development Centre (EDC).

In addition to the academic programmes, LUMS also undertakes research work and offers consultancy services. Research projects under the Centre for Management and Economic Research (CMER) primarily deal with major economic and management issues faced by Pakistan and the region. The Small and Medium Enterprise Centre (SMEC) investigates the role that government policy and socio-political influences play in the development of small and medium enterprises. It also caters to the training and development needs of small and medium scale enterprises.