BJU was founded in 1927 by evangelist Bob Jones, Sr., in College Point, Florida. Jones was the son of an Alabama sharecropper. His stated purpose was to create a school where Christian students could receive a high-quality education in a strongly traditional Christian environment.

The school moved to Cleveland, Tennessee in 1933, and to its present campus in Greenville, South Carolina in 1947.

From its 1927 founding to 1971, black people were prohibited from enrolling. From 1971 to 1975, only unmarried black people were permitted to apply to the school. After the 1975 court decision of McCrary v. Runyon, which prohibited racial exclusion from private schools, the policy was changed. A person of any race could apply to the school, but the school adopted a disciplinary rule prohibiting interracial dating or marriage:

The former policies of Bob Jones University on interracial dating are indebted to the founder's view that the Bible forbids interracial dating and marriage, though today, Bob Jones University sometimes claims that the policy is a product of a (1950s) legal threat on the part of the parents of a female Asian student (who threatened legal action after learning that their daughter was dating a white student).

The school lost its Internal Revenue Service tax exemption in 1980 because of its anti-interracial dating policy. The school appealed all the way to the U.S. Supreme Court, arguing that the school met the criteria for tax-exempt status on several counts, including that the school's racial discrimination was based on sincerely held religious beliefs. U.S. President Ronald Reagan supported the school's tax exempt status, but the U.S. Supreme Court ruled in 1983 in favour of the IRS (see Bob Jones University v. United States, 461 U.S. 574) and the school does not intend to seek tax-exempt status again. In 2000, the policy was dropped in its entirety[1]  (after some experimentation with a policy of parental consent for interracial dating) shortly after the State of South Carolina formally legalized interracial marriage.