Before the Chinese Civil War, there were three airlines operating in the Republic of China. One was Civil Air Transport, founded by General Claire L. Chennault and Whiting Willauer in 1946. The other two were joint ventures by the ROC government with Pan American World Airways and Lufthansa. As a result of the Chinese Civil War, the Communist Party of China took control of mainland China, and only Civil Air Transport moved along with the Kuomintang-controlled ROC government to Taiwan. With a fleet of 2 PBY Amphibians, China Airlines was established on December 16, 1959, with its shares completely held by the ROC government.

It was founded by a retired air force officer and initially concentrated on charter flights. During the 1960s, China Airlines was able to establish its first domestic and international routes, and in October 1962, a flight from Taipei to Hualien became the airline's first domestic service.

Growth continued and on December 1, 1966, Saigon, South Vietnam (now Ho Chi Minh City, Vietnam) became the airline's first international destination. Trans-Pacific flights to San Francisco were initiated on February 2, 1970. The next 20 years saw sporadic but far-reaching growth for the company.

Routes were opened to Los Angeles, New York, London and Paris, among others (China Airline's first European destination was Amsterdam). Jets were acquired, and China Airlines employed such planes as the Boeing 747 in their fleet. Later, the airline inaugurated its own round-the-world flight: (Taipei-Anchorage-New York-Amsterdam-Dubai-Taipei). 1993 saw China Airlines listed on the Taiwan Stock Exchange.

China Airlines, Limited is the flag carrier of the Republic of China on Taiwan. The airline is not directly state-owned. However, it is owned by the China Aviation Development Foundation which in turn is owned by the government of the Republic of China. Unlike other state-owned companies in the Republic of China, the chairman of China Airlines does not report to the Legislative Yuan.

The airline, based at Taiwan Taoyuan International Airport and with headquarters in Taipei, currently flies to destinations in Asia, Europe, North America and Oceania. Due to current politically motivated prohibitions on the Three Links, the airline does not operate regularly scheduled flights between Taiwan and mainland China. All flights serving this market are thus concentrated at Hong Kong, where it has operated since 1967.