When Transylvania University was founded in 1780 it became the 16th college in the U.S. and the first west of the Allegheny Mountains. The school is named Transylvania (Latin for "across the woods") after the heavily forested region of western Virginia that became Kentucky in 1792.

It opened at Danville, Kentucky in 1785, and didn't move to Lexington until 1789. For some time it was called Kentucky University, while it had an affiliation with University of Kentucky.

C. S. Rafinesque, an unrecognized genius of botany and zoology from Europe, became the professor of botany at Transylvania University in 1819, teaching French and Italian as well. He started at once describing all the new species of plants and animals he encountered. In 1825 his book Neogenyton, drew much criticism from fellow botanists, causing his writing further to be ignored. In the spring of 1826 he was dismissed from the university, for either having an apparent affair with the university president’s wife or for attending even less classes than his students. He died in 1840 in Philadelphia, unknown and penniless. His considerable collections were sold as junk or destroyed. In 1924 his remains were brought back to Transylvania University to rest in a place of honor, in a tomb marked by the epitaph ‘A life of travels’.

The school is affiliated with the Christian Church (Disciples of Christ).