The origin of State Corporations (SCs) in Kenya dates back to the late nineteenth century with the construction of the Kenya-Uganda Railway line by the Imperial British East African Company (IBEA), which was a state corporation under the colonial government. The colonial administration subsequently established several other statutory boards mainly agricultural commodity, regulatory and marketing. After attaining independence, in 1966, the then Ministry of Agriculture and Animal Husbandry found it necessary to set up an Inspectorate of Statutory Boards to monitor and evaluate performance of statutory boards in the agricultural sector.

With the establishment of State Corporations in other sectors under various ministries, the Inspectorate of Statutory Boards was transferred from the Ministry of Agriculture to the Office of the President in order to spread appraisal and monitoring services to all Government Ministries. In 1986 the State Corporations Act, Cap 446 was enacted establishing the Office of the Inspector of State Corporations with the mandate of advising the Government on the effective management of State Corporations thus assuming the functions of the Inspectorate of Statutory Boards. Subsequently the department of Inspectorate of State Corporations (ISC) was established within the Office of the President.

Since its inception, the Inspectorate of State Corporations was active until November 1989 when its technical capacity was reduced from 30 senior technical officers to 5 and most State Corporations were also exempted from the provisions of the State Corporations Act Cap 446. Consequently, the performance of State Corporations deteriorated as a result of mismanagement of resources. In order to address this poor performance, wide ranging amendments were made to the State Corporations Act through the Statute Law (Miscellaneous Amendments) Act, 2002 among them, the lifting of exemptions and the renaming of the Office of the Inspector of State Corporations to Office of the Inspector-General (Corporations). The Office was consequently strengthened in 2003 by recruiting seventeen (17) additional technical officers.

The signing of the National Accord on 6th March, 2008, created the Office of the Prime Minister with the responsibility of coordination and supervision of Government functions. The Inspectorate of State Corporations among other departments was therefore transferred to the Office of the Prime Minister. The Office of the Prime Minister ceased to exist with the promulgation of the Constitution of Kenya 2010 and the subsequent general elections of 2013. The Inspectorate of State Corporations is currently domiciled under the Presidency.