The airline gained its air operators certificate in 2000, and was established in October 2000, but was unable to operate until 2003 due to political unrest in Nepal. Operations started on 6 February 2003 with a single Dornier Do 228; a second aircraft was added in April 2003.
12 October 2010, Lukla - Sita Air Dornier 228 registration 9N-AHB hit a wall beside the runway as its brake system did not work properly. The engine inlet of the aircraft was damaged heavily. The aircraft was attempting to land at Lukla airport. It was lifted by helicopter to Kathmandu for repairs and put back to service. This same aircraft went on to have another crash landing accident on Simkot airport in 2013.
28 September 2012, Kathmandu - Sita Air Flight 601, a Dornier Do 228 (registration 9N-AHA) crashed just after takeoff from Kathmandu International Airport. All 16 passengers and 3 crew on board were killed. The flight was bound for Lukla. An investigation report into the crash concluded that it was caused by passenger and cargo payload that exceeded the aircraft's maximum takeoff weight.
1 June, 2013, Simkot - Dornier 228 registration 9N-AHB sustained substantial damage in a landing accident at Simikot Airport. There were no injuries among the five passengers and two crew members. The left hand main landing gear broke and the Dornier 228 came to rest on the side of the runway. The no. 1 propeller, left hand wing and underside of the fuselage sustained substantial damage. The aircraft had to be airlifted to Kathmandu by a helicopter.
23 April, 2017, Phaplu - Flight number 617 of Sita Air has met a minor incident at Phaplu Airport, Salleri. Wing tip of Dornier 9N-AHR aircraft of Sita was damaged as the aircraft hit the wall at parking section of Phaplu Airport.