The airline was established in 1980 as Airline of the Marshall Islands and the current title was adopted in 1989. The airline is wholly owned by the Government of the Marshall Islands.
In January 2009, all flights were suspended while the airline's only plane, a 34-seat Dash-8, suffered wing damage after colliding with a FAA tower while being towed. Replacement parts were ordered, but flights were further delayed when the replacement part that arrived in February was for the wrong wing.
Air Marshall Islands now operates one Bombardier Dash-8 Q100 aircraft and two Dornier 228s.