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The creation of the Arab Open University (AOU) came as a personal initiative of HRH Prince Talal Bin Abdelaziz, President of the Arab Gulf Program for United Nations Development Organizations (AGFUND). Although roots of the concept go back to 1976, it was the more formal call, made by HRH Prince Talal in 1996, for establishing such an institution that would actually put the concept on a serious track. Said initiative was put forth to a congregation of Arab Ministers of Education and in Higher Education, held in Beirut, Lebanon, in 1998. Same concept was unanimously adopted by said congregation as an innovative institution of need.

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Following a feasibility study, undertaken by a major international firm in 1999, Under the Chairmanship of HRH Prince Talal, a Working Group started, in 1997, laying the foundations for the establishment of the institution. Following a feasibility study, undertaken by a major international firm in 1999, concrete steps were taken in order to shape the structure of the envisaged institution. In particular, formal agreements of collaboration were subsequently signed with the renowned United Kingdom Open University (UKOU). These agreements provide the AOU with opportunities to tap into learning resources of high quality standards for certain programs of study, offered by the institution. In addition, they allow the AOU, via consultancy arrangements, to benefit from vast accumulated experience at the UKOU.

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In June 2001, a formal launching of the institution was made at the Headquarters in Kuwait. Plans were reiterated for the inauguration, in October 2002, of six Branches in: Kuwait, Jordan, Lebanon, Saudi Arabia, Bahrain, and Egypt.                   

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By design, the AOU adopts an open system of learning, and hopes, in consequence, to serve local and regional communities with opportunities of higher education via the offering of market-driven programs of study. In addition, The AOU hopes, as well, to serve the Arab World, via its involvement in constructive activities of studies and research in various disciplines of knowledge.

As such, and as an institution of Higher Education, the AOU adopts a set of goals and objectives congruent with its set mission. These include the following:

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Offering opportunities of quality higher education to a large community of students.                 

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Fostering humanistic values and ethics as integral components of its learning and education processes.

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Early on, the AOU concluded a number of Agreements with the UK Open University (OU) in order to serve as enabling vehicles of structured and formalized collaboration between the two institutions, without jeopardy to the standing of the AOU as an independent institution.

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In particular, these Agreements have allowed the AOU to license, and modify, in accordance with its own philosophy of convictions, the learning materials prescribed for courses dictated in set three Baccalaureate programs of study in: English Language and Literature; IT and Computing; and Administration.

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Furthermore, one of the Agreements has set the stage and requirements for institutional Accreditation and program Validation by the Open University validation Services (OUVS); thereby, inherently subjecting the validated programs to measures of rigor and quality embodied in corresponding Benchmarks set by the British Quality Assurance Agency (QAA). The AOU, together with its six operating Branches, has subsequently been accredited by the OUVS in 2004. The three previously mentioned programs of study have also gained Validation status form the OUVS in 2004.