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The Institute was founded by the Brazilian physician and biomedical scientist Vital Brazil in 1901, according to Pasteur Institute paradigm, i.e., by combining in the same institution medical research, the transfer of the results to society as health products, and self-financing through this later activity. Its foundation was a reaction to the outbreak of bubonic plague in the city of Santos. It is internationally renowned for its research on venomous animals; it was visited by Theodore Roosevelt in 1912. It is also a state-supported producer of vaccines against many infectious diseases, such as rabies, hepatitis, botulism, tetanus, diphtheria, pertussis and tuberculosis, as well as polyvalent and monovalent antivenoms against the bites of snakes, lizards, bees, scorpions and spiders (which, historically were first developed in the beginning of the 20th century by Dr. Vital Brazil and his coworkers). Among the distinguished scientists at the institute were biochemists Karl Slotta and Heinz Fraenkel-Conrat, pioneers in the study of progesterone, estriol, and medical use of venom, from 1935 to 1948.
A fire in 2010 destroyed the collection facility, which maintained one of the largest collections of venomous animals in the world, comprising around 80,000 snake specimens, and an estimated 450,000 spiders and scorpions.
The name of the institute comes from "Butantã", a district in the west of the "município de São Paulo". "Butantã" itself is a Tupi word meaning "crushed soil".