The beginnings of the college can be traced to the launching of the Payyanur Educational Society which envisioned a revolution in the field of higher education in North Malabar. It was the result of the combined effort of people of all classes and communities over the years, of whom Late N. Subramanya Shenoy (former MLA of Payyanur), Late Advocate K.S. Uma Maheswara Iyer, Late Kannoth Kunhiraman Nair, Late N. Raghava Shenoy, Late K. Govindan, and Late Dr A.V. Karunakaran are to be remembered in particular. The long-cherished dream of the Educational Society was materialized on 15th July 1965 when Payyanur College came into existence to occupy a key space in the academic map of North Malabar. The Chief Patron, late Vyaghram S. Sivaramakrishna Iyer, who also contributed a very significant amount of Rs.50,000/- towards the project, formally inaugurated it. The 110 acres of land with which the college started functioning was donated by the landlords, mainly Sreedevi Amma Thirumumpu, and the people around. In the beginning the college was affiliated to Kerala University and the first Principal was Professor P.K. Surendranath. The college in its humble beginning provided instruction to about 960 students of pre-degree courses in the science and humanities streams. In 1968 the affiliation was shifted to the newly-formed University of Calicut. Five degree courses were started in 1969 and postgraduation in Mathematics was sanctioned in 1984.

The second stage of the development of the college was spearheaded by the Board of Management President Sri K.G. Mallar and the then Principal and eminent Professor Sri. A.K. Raghavan Nambiar. Later when Kannur University started functioning, Payyanur College became one of its prominent affiliated colleges. The third stage of development was the elevation of the college into a research center for three disciplines, Mathematics, Physics, and Hindi. In 2013 the first M.A. course was started in the college in English and the very next year the B.B.A. course was also launched. At present, the college offers undergraduate courses in 14 disciplines, spread across science, humanities, commerce and business administration streams; postgraduate courses in four (Mathematics, Physics, Chemistry, and English) and PhD Programmes in three.

In 2015-16 the college celebrated its golden jubilee with a variety of academic and cultural programmes spread over a year. Sri. Oommen Chandy, the then chief minister of Kerala inaugurated the jubilee celebrations and laid the foundation stone of the jubilee memorial administrative-cum-academic block which is nearing completion now. The developmental activities are headed by Sri. K. Ramachandran Master, the present president of the Educational Society.