Being founded on 17 October 1936, the ministry was established to provide electricity in Tehran. On 20 May 1943, its portfolio was expanded to include water management in the country. It was later renamed as the ministry of water and electricity on 17 March 1964. Later on 17 February 1975, after the parliamentary approval it became ministry of energy. On 10 May 1978, the ministry's function was expanded to contain the construction and operation of nuclear power plants in the country.
After the Islamic Revolution of Iran in 1979 some parliamentary changes took place for the duties of the ministry. On 12 July 1980, some of the functions of the ministry were given to the ministry of agriculture. On 7 March 1983, water management, and fair distribution of water resources were made part of the ministry of energy.