In 1995, it was felt by the Government of Pakistan that to guide and nourish the development of the software industry in the country, and to provide one-stop facilitation on behalf of all ministries, departments and agencies of Government of Pakistan in matters relating to the setting up of the software development and export business in the private sector, an organization needed to be created as no such existing Government of Pakistan Department was providing the said services.

In line with this realization, Private Software Export Board (PSEB) was established by means of an executive order vide Cabinet Division's notification dated 12th June 1995. The said notification outlined the composition and functions of the Board. The Board of Directors comprises of seven members, all nominees of the Federal Government. Two nominee are traditionally from the private sector. The primary and most significant task entrusted with the board was the formation of a national software policy to facilitate the rapid development of the Pakistan software industry.
The word 'Private' in the name of the organization was substituted by the word 'Pakistan' by the Ministry of Communication, Government of Pakistan in September 1997. Hence the name became "PAKISTAN SOFTWARE EXPORT BOARD (PSEB)".
Since PSEB was operating on a small scale and its main activities were limited to company registrations and renewals, limited interaction with the local software industry, and occasionally participation in seminars and international exhibitions, it was realized that opportunities in the IT sector could be better tapped if PSEB were to become a more independent organization. PSEB was incorporated as a company limited by guarantee under the Companies Ordinance - 1984, in June 1998.