The origin of the Astronomical Observatory of Trieste dates from 1753 when the Austrian Empress Maria Theresia established the Nautical School in the town of Trieste.  For some decades the Nautical School was hosted in the Jesuit College near the church of Santa Maria Maggiore. Astronomy was part of the curricular subjects taught to future captains.

In 1817 the Nautical School became the Academy for Commerce and Navigation and was moved to a new and larger seat in Palazzo Biserino, located on today’s Piazza Hortis. In 1851 a real, though temporary,  Astronomical Observatory was installed at the Academy. In 1866 the Astronomical Observatory was officially established as one of the Institutes of the Merchant Navy and a few years later merged with the Meteorological Station. In 1898 the Observatory was permanently separated from the Academy and became autonomous. The director was Ferdinand Anton and the seat was moved to the town periphery to a rented new and huge five-floor building with the aspect of a medieval palace. The building was palace Basevi, called Basevi castle, near the hills  of San Vito and San Giusto, which still hosts the Observatory. On the tower of the main building was installed a 16 cm refractor telescope, mainly suitable for the observation of comets. Under the direction of Eduard Mazelle the Observatory was enhanced by the acquisition of the most modern instrumentation for astronomy, seismology and meteorology available at the time, such as the meridian circle of  Troughton and Simms. The Observatory’s scientific research comprised then the study of the Universe, and of atmosphere and  Earth sciences.

In 1904 the Reinfelder refractor telescope was installed in the newly built dome of the neoclassical pavilion in the upper area of the park of Basevi castle near the entrance of today’s via Besenghi. Through observations with the Reinfelder Telescope Johann Krieger compiled the refined version of his Lunar Atlas.

In 1919 the town of Trieste was annexed to the Kingdom of Italy, and so did the Astronomical Observatory, director Luigi Camera. In 1925 the Institute was newly inaugurated and equipped with a new Zeiss 50 cm reflecting telescope which unfortunately could not be used profitably.

In 1932 professor Favaro, the director, tried unsuccessfully to move the seat of the Observatory to the Carso Plateau, far from the light pollution of the town. Due to the problem of luminous pollution, for several years only visual observations were possible, mostly made by Giovan Battista Lacchin during the Second World War. In September 1944 the Observatory was bombed. From 1947 until 1952  the Observatory was reconstructed and made fully operational again. The director, Ettore Leonida Martin, held also the chair of Astronomy of the newly founded Faculty of Sciences of Trieste University. During the post-war years of the Anglo-American Administration, Basevi castle was acquired by the Italian Ministry of Education, and the rental contract was terminated. Soon after, two new astronomers started novel research programs in the field of photoelectric photometry of  binary stars.

The growth of the Observatory continued after 1964 through the acquisition of instruments, the  great increase of both research activities and staff  by Margherita Hack who was appointed director in that year. In those years a new observing station was built in Basovizza on the Carso Plateau, at  the height of 400 m above sea level. In the following years the staff of the Observatory increased to the level of the main Italian Astronomical Observatories.

In 1999 the Astronomical Observatory of Trieste became one of the Institutes of the National Institute for Astrophysics.