The successful presentation of the concept resulted in the establishment of the Fraunhofer Institution for Factory Operation and Automation IFF in Magdeburg on January 1, 1992. Under Prof. Gottschalk's leadership, the institution, initially with a time limit, commenced its work.

Its fields included factory and production planning, production logistics, quality management, maintenance and specialized factory automation applications.

In October of 1992, the initially thirty employees moved from the temporary quarters at Martinstrasse 10 to Elbstrasse 3–5.

The space at Elbstrasse 3–5 was only a temporary solution. Once it had been designated a Fraunhofer Institute, plans for the construction of a new institute building were prepared. The cornerstone for the main Fraunhofer IFF building at Sandtorstrasse 22 was laid on June 19, 1996.

In 1998, the staff moved into the new building with modern facilities and equipment at Sandtorstrasse 22. It is officially opened on June 24, 1998.

It has floor space of 5,000 m² and stands on a plot of 7,389 m². The Fraunhofer IFF's testing facility takes up about 1,300 m².

The Fraunhofer IFF celebrated its ten year anniversary in 2002.

In the same year, Prof. Michael Schenk assumed overall management of Magdeburg’s Fraunhofer Institute.

In 2003, planning started for another institute building. The Virtual Development and Training Centre VDTC, a state-of-the-art research and training center for virtual technologies, was built at Magdeburg's Port of Science.

Ground for the Virtual Development and Training Centre VDTC was broken on November 15, 2004 by Dr. Horst Rehberger, Saxony-Anhalt Minister of Economics and Labor, Prof. Michael Schenk, Director of the Fraunhofer IFF, Dr. Lutz Trümper, Mayor of Magdeburg, and Dr. Joachim Welz, Head of the Ministry of Education and Cultural Affairs' Department of Academia, Institutions of Higher Education and Research.

The cornerstone for the new Virtual Development and Training Centre VDTC building was laid on June 23, 2005.

The traditional topping out ceremony for the preliminary Virtual Development and Training Centre VDTC was celebrated on December 21, 2005.

The newly paved street in Magdeburg's Port of Science where the Virtual Development and Training Centre VDTC is located was named and the VDTC now has the prominent address of Joseph-von-Fraunhofer-Strasse 1.

The Virtual Development and Training Centre VDTC opened on November 22, 2006 – only two years after the groundbreaking. In Magdeburg's Port of Science, the Fraunhofer IFF pursues applied research on digital engineering for the planning, testing and operation of technical systems.

The Fraunhofer IFF celebrated its fifteen year anniversary in 2007.

At the 11th IFF Sciences Days in 2008, the Federal Ministry of Education and Research announced the launch of the Virtual Technologies Innovation Alliance with three joint projects, AVILUS, AVILUSplus and ViERforES. The Fraunhofer IFF was involved in all three projects.

In 2009, the Fraunhofer-Gesellschaft celebrated its founding in Munich sixty years earlier on March 26, 1949. Its namesake is the scholar Joseph von Fraunhofer (1787–1826), a native of Munich who enjoyed equal success as a researcher, inventor and entrepreneur.

Otto von Guericke University Magdeburg and the Fraunhofer IFF jointly established the Center for Digital Engineering CDE on March 30, 2009. The researchers from both institutions are advancing the research and development of virtual technologies at the new university center.

The Fraunhofer IFF has collaborated with business, research, academic and government partners in Asia for over a decade. Our Asian partners are interested in our expertise in logistics, renewable energies and sustainability management. Magdeburg's Fraunhofer Institute intensified these activities and opened a branch office in Bangkok, Thailand, managed by Ralf Opierzynski, on August 25, 2009.

The Saxony-Anhalt Galileo Test Bed's development laboratory was opened at Otto von Guericke University Magdeburg on March 10, 2010. It is the only laboratory in Germany for the development of positioning, navigation and communication systems for transportation and logistics. In the future, state-of-the-art satellite applications for the transportation and logistics industries and mass transit as well as telematic and radio communication systems will be tested and refined here. Otto von Guericke University's regional partners in teh test bed’s operation include the Fraunhofer IFF, the Institut für Automation und Kommunikation ifak, the Hallesche Verkehrs-AG HAVAG, the city of Magdeburg and Magdeburger Hafen GmbH.