The idea to create ICMPD was launched among a small circle of European government representatives, gathered at the initiative of Switzerland, in the autumn of 1992. Western Europe was at that time in the midst of an asylum crisis, requiring innovative collective measures to reform asylum and refugee reception systems. Migration from and through the new democracies of Central and Eastern Europe was on the rise and the war in Bosnia and Herzegovina had led to mass displacement, requiring international burden-sharing. At the global level, it was recognised that growing north-south migration pressure will be a major issue on the political agenda for the next millennium.

From the 1950's until the mid-1980's, the multilateral fora dealing with migration in a European context were mainly the Council of Europe, OECD, ICEM/IOM and UNHCR. Informal consultations (now IGC) was created by Sweden and some like-minded countries in 1985. It worked together with the UNHCR to tackle the emerging asylum crisis. An EC/EU co-operation on immigration and asylum was initiated in 1986 in response to the new internal market system and establishment of external EU borders. The EFTA (European Free Trade Association) countries also initiated a move to make immigration co-operation level with that of the EC. Radical changes in Central and Eastern Europe gave birth in 1991 to the Vienna process (incorporated by the Council of Europe in 1994) and the Berlin process, which later became the Budapest Process. Existing institutions, such as those mentioned above, worked to enhance migration-related activities.

The founding countries of ICMPD felt a support mechanism was needed to provide a platform for informal consultations and efficient services in this newly emerging landscape of multilateral immigration and asylum co-operation. They also wanted to ensure that co-operation with Central and Eastern Europe be given a prominent role, taking into account the need to incorporate the new democracies into the European migration regime and to act against the risk of growing illegal migration. In light of this, it was clear at the Budapest Ministerial Conference in 1993 that ICMPD would become Secretariat to the Budapest process.

The basic agreement on the establishment of ICMPD, signed in Vienna between Austria and Switzerland, entered into force in May 1993, and the first Steering Group meeting was held in July of that year. The late Jonas Widgren was appointed director in August 1993 under an arrangement with Sweden. A presentation letter to all the responsible ministers of 24 governments, signed by the Swiss Minister of Justice and the Austrian Federal Minister of Interior, was dispatched in September 1993. ICMPD's head office, originally at Möllwaldplatz in Vienna's fourth district, was officially opened in November 1993.