After the formation of the Tasmanian Aero Club in 1927, the first air travel facility in Tasmania was built on the site. In July 1929 the Home Territories Department acquired land at the Western Junction, then also called Valley of Springs, for a £20,400 ($41,000) aerodrome. The Western Junction Aerodrome was officially opened in 1929, and opened for use in 1930.

From August 1940 until late 1944, the airport was used by the Royal Australian Air Force (RAAF) as a base for No. 7 Elementary Flying Training School. It was Tasmania's only RAAF Base. Two of the Bellman hangars from this period are still located at the airport, on the southern Freight and General Aviation operations area.

In 1962, under the leadership of Tony John, a plan for major redevelopment of the airport was approved. This included strengthening of all pavements, a runway extension, and a new two storey terminal building built by Hansen Yuncken. The airport was officially reopened that same year as Launceston Airport. In October 1982 the runway was further upgraded to accommodate Boeing 767s.

In 1998, the airport was privatised, and is now owned jointly by Launceston City Council and Australia Pacific Airports Corporation. The collapse of Ansett Australia in 2001, the introduction of Virgin Blue and Jetstar in 2001 and 2004; and the creation of the Australian low-cost airline market; have all contributed to a dramatic increase in aircraft movements at Launceston Airport. Tiger Airways Australia also introduced services, and withdrew again in July 2010 as did Bonza Airlines in 2024.