In September 1920, graduate women in Sydney formed the Sydney University Women Graduates' Association (SUWGA). Other states were quick to respond. The University of Queensland Women Graduates' Association was established at a meeting in September 1920 and the Victorian Women Graduates' Association in November 1920. During 1920-21, graduate women in South Australia and Tasmania indicated an interest in linking up with their interstate counterparts in the formation of the AFUW.

The AFUW was formally established at the inaugural conference held in Sydney in September 1922, which was attended by 75 women, representing every state except Western Australia. Mrs Frances Thorn of the Victorian association was elected as AFUW's first President, with Mrs Muscio elected as Vice-President. The Western Australian Association of University Women was formed in 1923 and the Canberra Association of Women Graduates in the 1944.

The AFUW is a member association of the International Federation of University of Women (IFUW). Founded in London in 1919, the IFUW is the international federation of all the associations of university women of various countries, within which each constituent association has its own autonomy. At the first IFUW conference, held in London in 1920, the aim of the Federation was laid out in the Constitution as being 'To promote understanding and friendship between the university women of the nations of the world, and thereby to further their interests and develop between their countries sympathy and mutual helpfulness.' Miss Lousia Macdonald and Mrs Mildred Muscio were the Australian representatives at the first IFUW conference in London in1920, and it was soon after this that initiatives were taken in Australia to form an Australian association of the IFUW. Over the years, the IFUW has been involved in a number of initiatives related to improving the working and living conditions of women around the world. In addition to its involvement with women's issues specific to Australia, the AFUW also adopts IFUW initiatives and applies them at a national level.

At its peak in the 1930s, the Federatiosn' membership was some 6500, representing the great majority of all the women university graduates then living in Australia.

As of 2004 the FEderation decribed its objectives thus:

'Mission

AFUW is the voice of graduate women promoting the advancement of women worldwide and their equality of opportunity through initiatives in education, friendship and peace.

Aims

to unite the associations of women graduates in Australia for the furtherance of their common interests and for affiliation with IFUW
to promote understanding and friendship among women of the world irrespective of their race, nationality, religion or political opinions
to encourage international cooperation
to further the development of education
to represent university women in international organisations
to encourage the full application of their knowledge and skills to
The problems which arise at all levels of public life, whether national, regional or world-wide, and to encourage their participation in the solving of these problems

At the 1994 Triennial Conference in Queensland, the above Mission statement and Aims were ratified, and the Aims are now incorporated as Objects in our Rules of Association.

Focus

To identify and implement practical ways of ensuring gender equity at all levels of education, with special emphasis on supporting girls and women in accessing and completing higher education.'