The Institute was founded on the basis of an available scientific school of parametrical optics, which at that time was unique for its scientific direction as well as for its research level in Ukraine and abroad. the scientific school became well known within the world scientific community, beginning from the famous papers on electrooptics, which were the pioneer works in this branch.

The founder of the Institute was a famous scientist, public figure, and known Ukrainian politician – Prof. O. G. Vlokh (1934-2009). Prof. O.G.Vlokh started research at Ivan Franko Lviv State University, where Prof. Vlokh has revealed the phenomenon of electro-gyration and established the department of nonlinear optics.

For expanding research and in connection with their importance to the defense industry, the training of students in the field of "optical and optoelectronic systems" was started at the department and a special design bureau "Modulator" was organized. The duration of studying in this specialty was 5.5 years, with the last year devoted to research work in the laboratories of the department.

Graduates of the department have now become well-known scientists, doctors, and candidates of sciences, working both in Ukraine and abroad, and are headed the faculties and departments.

In general, more than 60 candidates and 27 doctors of sciences were trained during the period of the school's existence, most of them in the last years, namely during the period of functioning of the Institute of Physical Optics.

In 2014, the name of its founder – Professor O. G. Vlokh was given to the Institute by the Ministry of Education and Science of Ukraine.