Grace began in 1939. It was founded as Milwaukee Bible Institute, a training center for laymen and Sunday school teachers of Milwaukee. The Institute was organized by Reverend Charles F. Baker, then pastor of Fundamental Bible Church. The regular day school program began in 1945. This move was stimulated by a group of evangelical pastors especially concerned about advancing a dispensational theology approach to the Bible, the distinctive character of the revelation given to the apostle Paul, and the preparation of full-time Christian workers to fulfill this goal. In 1953, the curriculum was broadened and Milwaukee Bible Institute became Milwaukee Bible College.

In 1961, the College relocated to suburban Grand Rapids, Michigan, and was renamed Grace Bible College. The State of Michigan granted the University the authority to grant Associate and Bachelor of Religious Education degrees, as well as a five-year degree for vocational ministers. In 1967, Dr. Jack T. Dean became President and led the College through a period of growth and expansion. Early on, the College (1967) received accreditation from the Association of American Biblical Colleges (now Association of Biblical Higher Education). In order to serve the growing needs of students and those of the broader Christian community and society, Grace has expanded its degree programs over the years. These include Associate of Arts degrees in General Studies and Business as well as Bachelor degrees in Business, Early Childhood Education, Human Services, Interdisciplinary Studies, and Worship Arts. The Bachelor of Science in Biblical Studies degree is granted with Concentrations in General Ministry, Intercultural Studies, Pastoral Ministry, Youth Ministry, and Women’s Ministry.