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The formation of a British University in Egypt arose from a 1998 Memorandum of Cooperation between the UK and the Egyptian Governments. It was envisaged that such an institution would produce graduates of UK standards for key sectors of the Egyptian economy, particularly in the areas of engineering, computer science and business studies.

Planning for the new institution was put in train and financial support was provided by a group of prominent Egyptian business and public figures, principal amongst whom was Mr. Farid Khamis, Chairman of Oriental Weavers, a major international carpet manufacturing company. In 2004, with strong support from the British Embassy and the British Council, a Presidential decree was issued establishing the British University in Egypt. The initial phase of the University campus was already under construction and the University welcomed its first cohort (only 200 students) of undergraduate students in September 2005.

The University campus was chosen to be located in the area of El Sherouk, one of the new residential and commercial cities in Egypt on the outskirts of Cairo. The campus on establishment compromised of only two buildings including a large-scale auditorium with modern conference facilities but is set on a site of approximately 60 acres that will to develop over the years.

The BUE was formally inaugurated by HRH Prince of Wales and HE Mrs. Mubarak, Egypt's First Lady, on 22 March 2006.

The University has been supported by a high profile and influential Board of Trustees compromising individuals drawn from UK and Egyptian business, public life and educational sectors.

A group of UK universities, led by Loughborough University provided the academic direction, teaching and quality management processes thereby ensuring the 'British' quality of the education.

The academic staff consisted of highly qualified British, Egyptian and international academics experienced in the British system of Higher Education.

BUE was established initially with seven faculties: Engineering, Informatics and Computer Science; and Business Administration , Economics and Political Science, Pharmacy, Dentistry, Communication and Mass Media, and Nursing.