In the year 1985, the Government of the People's Republic of Bangladesh formed Civil Aviation Authority, Bangladesh (CAAB) vide Ordinance No. XXXVIII of 1985, titled The Civil Aviation Authority Ordinance, 1985.

Department of Civil Aviation (DCA)
In the year 1947, Department of Civil Aviation of Pakistan was formed. This department had been doing management and operations of civil aviation in this portion of the country named East Pakistan till 1971. After the Independent war of 1971, Department of Civil Aviation (DCA) started its journey almost from scratch. Because during the nine-month long war for independence the aviation infrastructure was badly damaged due to bombardments by Allied Forces over the main airports in order to disable Pakistan Forces. DCA of Bangladesh inherited the assets and property left over by the erstwhile DCA of the Pakistan. Aviation activities in independent Bangladesh started in the last week of December, 1971 under the Ministry of Defense.

Airports Development Agency (ADA)
There was another organization, a limited company named Airports Development Agency (ADA), that was working from Pakistan period. It was formed in the year 1965 and its functions were to construct aerodromes and airports, and to perform all required electrical and mechanical engineering works for DCA. It was essentially an engineering organization in nature.

Changes in management
There had been bureaucratic and administrative problems not befitting civil aviation management. DCA was a pure Government organization and on the other hand ADA was a company. The making of decisions and there implementations by DCA suffered from bureaucratic complexities resulting in lengthy processes as it was a Government organization. The functions of ADA were essentially related to the DCA functions but DCA did not have administrative control over it. The International Civil Aviation Organization (ICAO), an agency organization of the UN for formulation and co-ordination of aviation procedures and activities worldwide, had been recommending to convert the DCA to a more independent authority reducing Government's control over its activities.

1982: DCA and ADA merged into Civil Aviation Authority
In the year 1982, the DCA and the ADA were merged together to form a compact organization and was named as Civil Aviation Authority vide Ordinance No. XXVII of 1982 titled the Civil Aviation Authority Ordinance, 1982 promulgated by the Government. This Authority was vested with more power regarding organizational management, but the Government reserved the power regarding financial management. This arrangement did not serve the purpose well.

1985: Civil Aviation Authority of Bangladesh
In the year 1985, the present Civil Aviation Authority came into existence as a body corporate with full managerial power, both regarding organizational and financial, vested with it vide Ordinance, 1985. This ordinance repealed the Ordinance, 82 and dissolved the previously constituted Civil Aviation Authority transferring all its establishment, assets and liabilities to the new Authority.