The institutional frameworks of the research on literary history were laid as early as in 1950: on the 1st of October, that year, the Documentation Centre for Literary History (Irodalomtörténeti Dokumentációs Központ) was opened with Előd Halász as its director. His colleagues were Mariann Bódi-Marton, Ilona Török-Erdélyi, and a few monthes later Károlyné Balázs, István Rejtő and Béla Lengyel. István Vizy and Kálmán Bor joined the Centre between 1952 and 1954. Most colleagues worked on proceeding foreign (English, Russian, German, French, Italian, Romanian, etc) periodicals while István Vizy edited World Literature Review (Világirodalmi Figyelő) and the other publications. Most translations were Russian studies. In 1952, director Előd Halász was replaced by Béla Lengyel, then Tibor Kardos took the position over in 1955. According to one of its decisions from 1950, the original plan of the I. Section of HAS, the Hungarian Academy of Sciences (Magyar Tudományos Akadémia), was to merge the Documentation Centre into the Institute for Literary Studies that was to be established. 

In the fall of 1953, Tibor Klaniczay became the professional secretary of the I. Section and he was commissioned with organizing the Institute for Literary Studies. The first comprehensive proposition was made by György Lakó, section secretary, in November 1953. Then various bodies discussed the structure to be formed, the tasks to be determined and the plans for the budget and the number of staff. Finally, in its act nr. 00470/1955., the HAS handed in the proposal to the cabinet, which was approved by the government in its decision nr. 2253/1955/XII.24., and so the Institute for Literary Studies of the HAS was established.

The Institute started to operate on the 2nd of January 1956. At the time of its establishment, its work was managed by the Scientific Committee – its president was István Sőtér, its secretary Tibor Klaniczay who was the deputy director, too, at the same time. Sőtér had been considered its director from the beginning, however he was only appointed in 1957 (due to his other positions held elsewhere). From 1967, Miklós Szabolcsi was appointed – as managing director – to the newly created position of a second deputy director. Following István Sőtér’s retirement (1983), Tibor Klaniczay (1984–1992, deputy: György Bodnár), György Bodnár (1992–1997, deputy: Béla Pomogáts) and László Szörényi (from 1 August 1997, deputy: József Jankovics) were leading the Institute, while now Gábor Kecskeméti is the director. The Institute is located in the building of the Eötvös Collegium, while the excellent library of the Collegium is now the library of the Institute.

The first two thirds of the year 1956 passed with organization, planning and laying down the bases for operation, when the revolution broke out and made systematical work impossible. Establishing the structure of the Institute and working systematically could only start in 1957. The first and most important task was to prepare a new summary of Hungarian literary history, which is more detailed than anything before and expands to the present. Following appropriate preparation and additional research, the six-volume-long Hungarian literary history manual was written with the cooperation of 61 authors at the beginning of the 1960s. The long-needed work has been published three times while its first four volumes have had four publications so far.

Besides the literature of the past, the critical evaluation of today’s literature and the scientific examination of current literary tendencies have also been important to the Institute right from the start. This was especially significant in the 1950s–1970s when – against the expectances of the power and politics of those times – some colleagues contributed to the acknowledgement of real literary values with their critical activities. Research on literary theory, that had been neglected in Hungarian literary science, started in 1959 with Lajos Nyírő’s guidance who organized a separate Literary Theory Section. In 1963 the Institute launched its periodical titled Criticism (Kritika), which was edited by András Diószegi and issued until 1971 – it served as an organ where progressive research on present-day literature and literary theory was published.       

The Institute undertook an important role in publishing the critical editions of Hungarian writers’ works and in exploring and publishing the sources (correspondances, documents etc) of literature. It launched several series of text editions and initiated the establishment of the Committee on Textology of the HAS (MTA Textológiai Bizottsága) in 1960. Working groups were formed for the research of the history of Hungarian literature: the Section of Old Hungarian Literature, and the 19th-Century and 20th-Century Sections. The latter one was the strongest and most populous; it started to be more active in 1958 when its leadership was taken over by Miklós Szabolcsi. The organizational frameworks of the research on earlier centuries had been changed several times until they became steady around 1970. In 1969, the Renaissance Researh Group (Centre de Recherche de la Renaissance) was formed with Tibor Klaniczay’s guidance. It has since gained international reputation due to its colloquia and publications. With István Szauder’s leadership, a separate research group was established in 1970 for 18th-century research while the 19th-Century Section was reorganized with Sándor Lukácsy’s direction.   

István Sőtér initiated the relaunch of the studies on comparative literary history, which had once been significant but later declined. Since 1961, Hungarian researchers have regularly taken part in the work of the Assotiation Internationale de Litterature Comparée (AILC), and the Institution has taken up a role in establishing the cooperation of literary professionals in Central European countries. Liaising with the institutions of other countries (researchers’ shadowing, regular conferences, joint research, cooperation agreements) has supported this aim. In the sign of this cooperation, the Institute organized the first Eastern European conference on comparative literary history in 1962 in Budapest. As commissioned by the association, the plan of the enterprise called Histoire comparée des littératures des langues européennes was developed in the Institute. The secretary of the Comité de Coordination, established in 1967 to manage the project, was György Mihály Vajda, head of section, until 1982. 

The central topic of the research of comparative literary history has always been the analysis of the problems that were common in the literature of Central and Eastern European countries. This work was done by the Section of World Literature (called Section of Comparative Literary History since 1965), which ceased to operate in 1984. With Endre Bojtár’s leadership, the Central and Eastern European Section could be put into its place in 1986.

When its organization was completed, 55–60 researchers were working in the Institute for a long time. However, this number has been continuously decreasing since the late 1980s due to budgetary restrictions. The Institute today operates with 40 researchers.

Many colleagues have been undertaking courses and seminars at various universities. Besides, the Institute can be regarded as a “centre for training professors” – many of the teachers of the Institute of Hungarian Literature and Cultural Studies of ELTE (Eötvös Loránd University) and other institutions of tertiary education used to be the colleagues of the Institute for Literary Studies of the HAS.

In 2003, the leaders of the HAS united the Institute with the Illyés Gyula Archives. The opening ceremony of the Archives was held on the 15th of April 2003.