The German-English Academy (GEA) was founded in 1851, opening with two teachers and fifty students. In the same year, Milwaukee Female Seminary (predecessor to Milwaukee Downer Seminary, MDS) was formally chartered as Milwaukee Normal Institute and High School. GEA was a leader in local and national offerings, establishing the first kindergarten program in Milwaukee in 1873 and, in 1891, introducing America's first gymnasium in its new school building.

In 1917, the German English Academy changed its name to Milwaukee University School (MUS). Also in 1917, Milwaukee Country Day School (MCDS) opened in Whitefish Bay, with an initial enrollment of 55 students. As MCDS, MDS, and MUS continued to grow, new facilities were a part of their plans. In 1959, MDS and MUS each purchased land on Fairy Chasm Road in River Hills, and MDS sold its Hartford Avenue campus. The MDS Fairy Chasm Road campus then opened in 1961.

A merger committee was formed in 1963, and by fall, completed negotiations were announced to the public. MCDS, MDS, and MUS would merge and open as University School of Milwaukee for the 1964–65 school year. The new school would be housed on two campuses, the North Campus (Fairy Chasm Road, River Hills) and the South Campus (Santa Monica Boulevard, Whitefish Bay).

The North Campus would welcome boys and girls in 1st through 6th grades and girls in 9th through 12th grades. Nursery school to 5-year-old kindergarten, boys and girls in 7th and 8th grades, and boys in 9th through 12th grades would be taught on the South Campus. Students chose "Wildcats" as the new school's nickname. In 1970, the girls' Upper School moved to the South Campus, making the Upper School coeducational.

In 1975, in order to keep pace with emerging technologies, USM tied in with a computer at the University of Wisconsin-Milwaukee via phone, as four small computers were purchased for the Upper School campus. In 1981, the school made additional plans for incorporating new technology by starting a fund to computerize the school and extend computer education.

In a change to campus life, USM graduated its last boarding student in 1976, and in 1983, began a capital fundraising effort to finance consolidation of the Lower School, Middle School, and Upper School on one campus. The unified campus (on Fairy Chasm Road) opened in 1985 with 770 students.

Continually offering new opportunities, USM introduced foreign language programming to students in the Lower School in 1984, with Spanish offered three times per week beginning in kindergarten. A tradition of exploring American history began in 1987 when the 8th grade took its first trip to Washington, D.C. USM incorporated another way to learn beyond the classroom in 1991, when the school established an outdoor nature classroom. Options for learning about the world further expanded as USM began phasing in a new computer network to provide school-wide access to the internet in 1996.

At the start of the next decade, the school experienced a change in leadership. In July of 2000, Ward Ghory became head of school, and in November of that year a strategic plan was adopted.

Over the next five years, the goals of the plan came to fruition. During that time, Phase I of the Next Generation Campaign funded a new Upper School science center and other facility improvements, and grew the endowment for tuition assistance, faculty support, and other programs.

A new strategic plan was developed in 2006, which led to Phase II of the Next Generation Campaign, completed in 2010. This campaign funded the construction of a new Lower School addition and Middle School renovations. In all, the Next Generation Campaign raised more than $36.8 million, and provided USM with the ability to offer 21st-century facilities for a 21st-century education.

In July of 2011, Laura Fuller became the eighth head of school, and the first woman to lead the school, since the merger. USM continued to advance and grow in all three divisions, with an enrollment of 1,091 at the start of the 2019–20 school year, Fuller's final year prior to her retirement.

In September of 2013, USM unveiled a new strategic plan, which more formally introduced the concepts of global education and engagement, professional leadership, and innovation, and focused on the importance of providing USM students with an experiential learning component that would ensure the vital hands-on experiences necessary for a true and demonstrated understanding of concepts, skills, and ideas.

Throughout the 2014–15 school year, the school community gathered together to celebrate "50 Years of USM" since the merger of its predecessor schools in 1964. In May of 2015, on the heels of a year of celebration, and following a six-month feasibility study, the school's Board of Trustees voted to move forward with a new fundraising campaign and began the quiet phase of that campaign.

In August of 2015, a comprehensive fundraising campaign—titled Our Common Bond to reflect the strength of the entire USM community—is introduced, with a bold goal of raising $27 million in support of strategic plan initiatives, including facility enhancements, endowment growth, and annual fund support. By the end of the 2015–16 school year, the campaign had received gifts and pledges from the entire Board of Trustees. By May of 2017, the school had opened a new community room and broken ground for a new Upper School commons and servery, innovation center, and performing arts center addition, all of which opened to rave reviews over the next several years.

In June of 2020—less than five years after the introduction of Our Common Bond—USM had surpassed its working goal by raising more than $30 million, including more than $15 million for facility additions and enhancements, nearly $8 million in endowment support, and nearly $7 million in support of the USM Fund.

The USM community's culture of generosity also put the school in a strong position as it was forced to implement its USM@HOME distance learning plan in March of 2020 as a result of the COVID-19 pandemic and statewide closure of schools. The plan allowed USM to maintain continuity of teaching and learning in a primarily online environment while allowing for virtual interaction amongst faculty and students through the end of the school year.

Following Laura Fuller's retirement at the end of the 2019–20 school year, Steve Hancock became USM's ninth head of school on July 1, 2020. At the conclusion of a one-year head transition plan, the school's Board of Trustees began the development of a new strategic plan for the school, which was introduced in the fall of 2022.

Today, USM continues to provide an excellent educational experience to a diverse student body, preparing them for a lifetime of success. Everyone in the USM community—students, alumni, parents, grandparents, parents of alumni, and current and former faculty and staff—plays an important role in the continued success of University School of Milwaukee.