Central University was founded as the result of a split of the Presbyterian Church in Kentucky into Northern and Southern branches. While the Presbyterian Church had split into two branches in 1861, principally over the issue of slavery, the Church did not split in Kentucky until 1867. The branches both claimed control of Centre College in Danville, and it finally took a Federal court in 1871 to determine that the Northern branch controlled the institution. A group of concerned members of the Southern Synod met in 1872 and formed the Alumni Association of Central University. Members included Alumni of Centre College as well as other prominent leaders of the movement. The Alumni Association offered to cooperate with the Synod in establishing a university.
At a meeting of the Alumni Association in Louisville in February 1872, an effort to provide synodical control of the university was defeated. Central University received a charter from the state legislature on March 3, 1873. The charter placed the government of the university in the hands of those who had endowed it and who would later become its graduates and whom the Alumni Association might thereafter elect.
The Association called for an endowment of $150,000 but received pledges for $220,000. Anchorage, Kentucky, was selected as the site for the university, but when the citizens of Richmond and Madison County pledged $101,000, the school opened there on September 22, 1874, with a total of 224 students and one newly built classroom building. The original college organization consisted of a College of Letters and Science, a College of Law, and a Preparatory Department in Richmond, and a College of Medicine in Louisville. In 1886 a College of Dentistry was opened in Louisville, and in the 1890s three associated institutions opened: Jackson (S.P. Lees) Collegiate Institute (1890) in Breathitt County, Middlesboro Collegiate Institute (1892), and Hardin Collegiate Institute (1896).
The Alumni Association appointed the Board of Curators, which served as the trustees. Eventually, in 1884, the southern Synod took over direct control of appointing the Board of Curators in exchange for the church's financial support. The university itself was headed by a chancellor. Robert Levi Breck served in that capacity from 1874-1880. He was succeeded by Linsay Hughes Blanton, who served until the consolidation with Centre College in 1901.
Almost from the outset, Central University had financial problems. The original endowment was in promissory notes and pledges, a large number of which went uncollected due to the panic of 1873. Another important endowment drive was hampered by the panic of 1893. Enrollment was also a problem. It dropped every year of Breck's chancellorship, and the school never graduated a class larger than 25. The school met financial crisis after crisis, mainly by reducing faculty and salaries. To increase enrollment, the university became co-educational in the 1880s. Social fraternities and intercollegiate athletic competition were instituted in the 1880s. However, low enrollment and financial problems led directly to the consolidation with Centre College. Prominent Madison countians bitterly fought the consolodationists but were outvoted. Finally on July 16, 1901, the merger between the schools took place. The new institution would be located in Danville on Centre's campus and known as the Central University of Kentucky.