Founded by the Slovene Academy of Sciences and Arts (SAZU) in 1972 on the initiative of academician Dragotin Cvetko, the Institute of Musicology commenced work in Autumn 1980. Cvetko became its first Director and the President of its Research Advisory Board. The Institute of Musicology was conceived as an institution that would specialise in the study of historical musicology in the Slovene lands within a conceptual scheme of national academic science. Upon the founding of the Scientific Research Centre of the Slovenian Academy of Sciences and Arts (ZRC-SAZU) in 1982 and the reorganisation of the institutes, Cvetko remained President of the Research Advisory Board while Danilo Pokorn took up the position of director, heading the institute until 1992 when he was succeeded by Ivan Klemenčič who carried out the function of the Head of the Institute (the function had been renamed) until 2004. From 2004 onwards the Head of the Institute is Metoda Kokole.
During the 1980s and 1990s the basic research work of the Institute of Musicology included the inventory and critical publication of important sources for the history of music in the Slovene lands on one side, and their academic study on the other. In this vein the collection Monumenta artis musicae Sloveniae was launched in 1983, and is still in circulation. Within the scope of the series the Institute of Musicology prepares and publishes musical works by the authors who have worked in the area of today's Slovenia during various historical periods.
The Institute of Musicology is also involved in the education of young researchers in the history of musical art. Researchers of the institute publish their research findings in international academic journals and in conference and other types of proceedings, and publicly present them through independent lectures at academic meetings in Slovenia and abroad. The institute organises international academic conferences, prepares educational exhibitions, and organises concerts. Since 2005 the institute publishes the scholarly journal De musica disserenda.
The institute's library contains musicological literature, a smaller stock of recent musical scores, copies of manuscripts and editions of earlier Slovene music and audio collection, all together more than 7,000 units of library material.
Since 2018, the Institute of Musicology has been increasingly involved in the field of digital humanities, primarily through the use of relational databases and the analysis and visualization of larger databases.
The Institute of Musicology collaborates with similar organisations abroad: the Pedagogical Faculty of the State University of Tver in Russia, the Ethnological Institute of the Czech Academy of Sciences in Prague, Czech Republic, and the Institute of Art of the Polish Academy of Sciences in Warsaw, Poland.
The Institute of Musicology participates in the international musicological projects of the Répertoire international des sources musicales (RISM) [Online Catalogue of Musical Sources] and the Répertoire international de littérature musicale (RILM) [International Repertory of Music Literature].