The foundation of AILA was agreed upon at the International Colloquium of Applied Linguistics at the University of Nancy, France (hence AILA's French name), 1964. This decision was a result of two years preparatory work and discussion, with the financial support of the Council of Europe. At that time, the clientele to be served by this new international association was restricted mainly to linguists and language teachers in Europe. The first president of AILA was Bernard Pottier, supported in organizational and administrative matters by Max Gorosch. The founding congress of AILA in Nancy was almost exclusively run in French, and the main strands into which the contributions were organized were automatic translation, language teaching and research cooperation in Europe.

Bernhard Pottier had no direct successor until 1969, when at the Second International Congress of Applied Linguistics at the University of Cambridge (in fact the first one with this title) AILA was virtually refounded and Pit Corder was elected President and Bertil Malmberg became Secretary General. It was from then on that AILA got a constant organizational structure and that AILA Congresses were held on a triennial basis. Also from then on, English became the de facto lingua franca in AILA, although the Association was officially French / English bilingual from its beginning and still is today. This congress also became prototypical for all following AILA Congresses in that its strands represented the key issues in Applied Linguistics of the respective time - in that case, the psychology of second language learning, sociolinguistics, and contrastive linguistics.

Originally a European initiative, AILA has become truly global over the past 40 years, including now affiliates from Africa, Asia, Latin America and North America.