In 1927, the City of Madison purchased 290 acres of land for $35,380. Previously a cabbage patch for a nearby sauerkraut factory, the newly acquired land would later become the present-day home of the Dane County Regional Airport. In January 1936, the city council voted to accept a Works Progress Administration grant for the construction of four runways and an airplane hangar. Additional grants financed the terminal and administrative building as well as electric floodlights. The development price tag was $1 million – 10% paid by the city and the remainder by the federal government. In September 1938, Barnstormer Howard Morey of Chicago; Edgar Quinn; and J.J. McMannamy organized the Madison Airways Corporation.

The airport was renamed Truax Field and activated as a U.S. Army Air Corps airfield in June 1942 during World War II. It was named for Madison native, Lt. Thomas "Bud" Truax, who died while training at the base in November 1941. The base's activation brought an influx of service members and their families to Dane County, and their pocketbooks helped to boon the community's wartime economy.

During World War II, the field was used by the Army Air Corps Eastern Technical Training Center, a major school operating at Truax AAF for training radio operators and mechanics. The airport later expanded to training in radar operations, control tower operations, and other communications fields for the Army Airways Communication Service. A unit established in 1943 trained radio operators and mechanics on B-29 Superfortress communications equipment. The host unit on the airfield was the 334th (later 3508th) Army Air Corps Base Unit. On September 17, 1945, the airfield's mission was changed to that of a separation center and it was closed as an active AAF airfield on November 30, 1945.

Conveyed to local civil authorities, the Madison Municipal Airport became the home to the 1st Battalion 147th Aviation Regiment. The 1-147th operates the UH-60M Blackhawk Helicopter and has deployed in support of Operation Enduring Freedom. The airport is also home to the Wisconsin Air National Guard and its present-day 115th Fighter Wing (115 FW), an Air National Guard fighter wing operationally gained by the Air Combat Command (ACC). Today, the Air National Guard's Lockheed Martin F-35 Lightning II operates at the base. The 115th Fighter Wing is one of the 14 operational air defense units responsible for air defense of the eastern continental United States.

On December 15, 1966, a 31,000 square foot terminal building opened on the west side of the airfield at a cost of $2.36 million. The first scheduled jets were Northwest Orient 727s in 1965. In 1986, the airport tripled in size with a $12 million project that expanded the terminal from 32,000 square feet to 90,000 square feet, adding a second-level concourse with six boarding bridges.

In 2006, the airport completed a $68 million expansion that doubled the size of the terminal, built in a Frank Lloyd Wright-influenced prairie style designed by the Architectural Alliance based in Minneapolis. The new terminal accommodates 13 gates with jetways, WiFi, additional restaurant and retail vendors post-security, an art court, and both business and family lounges. The airport has also continued to expand its parking options, most recently in 2014.

On February 7, 2018, the airport announced a significant terminal modernization program, including replacement of existing jet bridges and design work beginning in 2018 as well as major construction including additional jet boarding bridges beginning in 2019. The county is also planning to add an 8 MW solar energy site on airport-owned land.

In 2021, the airport began construction on an $85 million expansion of the terminal dubbed the South Terminal expansion. This project adds three additional gates that can accommodate larger aircraft. The new terminal contains two stories with 45,000 square feet of public space. The first floor consists of 45,000 square feet of maintenance workshops and infrastructure. The concourse floor above includes the new gates, a restaurant, a play area for children, a nursing suite for mothers and a service animal relief area. The south terminal expansion was completed, and formally opened, in June 2023. As part of this expansion, three new gates were added to the airport. In addition to this expansion, development has begun on three additional gates.

In February 2025, DCRA announced that it would formally apply for an international airport designation from the U.S. Treasury Department. The designation would allow passengers to fly directly to and from international destinations and satisfy customs requirements.