In 1992 the Institute for Algorithms and Scientific Computing (SCAI) emerged from the "Institute for Basic Methodologies in Information Technology" (Institut für Methodische Grundlagen der Informationstechnik) of the former Society for Mathematics and Data Processing (Gesellschaft für Mathematik und Datenverarbeitung — GMD).

The institute's activities in information technology have — to a large extent — been marked by theoretical and practical aspects of the Petri nets (until 1990 Carl Adam Petri was one of the directors of the institute) and in numerics by the development and application of multi-grid methods.

As a member of the GMD National Research Center for Information Technology, the institute was headed by Professor Dr. Ulrich Trottenberg (managing director), responsible for Scientific Computing, and Professor Dr. Thomas Lengauer (Ph.D.), responsible for discrete algorithms and their applications.

In Juli 2001 the GMD was merged with the Fraunhofer Society for Applied Research (Fraunhofer-Gesellschaft für Angewandte Forschung e.V. (FhG). At the end of 2001 Professor Lengauer joined the Max Planck Institute for Informatics at Saarbrücken as head of the department for Computational Biology and Applied Algorithmics.

While basic research and applied research used to be equally represented in the institute, Fraunhofer SCAI is now concentrating on applications. The new competence units of SCAI are Simulation Engineering, Numerical Software, Web-based Applications, Bioinformatics and Optimization.