The University of Otago, founded in 1869 by an ordinance of the Otago Provincial Council, is New Zealand's oldest university. The new University was given 100,000 acres of pastoral land as an endowment and authorised to grant degrees in Arts, Medicine, Law and Music.

The University opened in July 1871 with a staff of just three Professors, one to teach Classics and English Language and Literature, another having responsibility for Mathematics and Natural Philosophy, and the third to cover Mental and Moral Philosophy. The following year a Professor of Natural Science joined the staff. With a further endowment provided in 1872, the syllabus was widened and new lectureships established: lectures in Law started in 1873, and in 1875 courses began in Medicine. Lectures in Mining were given from 1872, and in 1878 a School of Mines was established; this later became the Department of Mineral Technology and was transferred to the University of Auckland in 1987.

The University was originally housed in a building (later the Stock Exchange) on the site of John Wickliffe House in Princes Street but it moved to its present site with the completion of the northern parts of the Clocktower and Geology buildings in 1878 and 1879. The School of Dentistry was founded in 1907 and the School of Home Science (now Consumer and Applied Sciences) in 1911. Teaching in Accountancy and Commerce subjects began in 1912. Various new chairs and lectureships were established in the years between the two world wars, and in 1946 teaching began in the Faculty of Theology. The School of Physical Education was opened in 1947.