It began in 1987 as a kollel run by Rabbis Ami Ulami (killed by terrorists in 1994) and Kalmanzon. Over the next few years, it grew to be a full hesder yeshiva. Rabbi Re'em Ha'Cohen joined the yeshiva in 1993. It adheres to a Religious Zionism ("Dati Leumi") philosophy, with a strong emphasis on Hasidic thought and an encouragement of artistic expression.
Today, Yeshivat Otniel is one of the largest hesder yeshivas, with roughly 350 students.