The first competitive Music Festival on Prince Edward Island was held on 10 May 1946 in the Prince of Wales College Auditorium. The Festival was organized by members of the Women's Institute District Convention Group and was open to the nine districts of South Milton, Harrington, Maple Hills, Brackely Beach, Spring Park, Parkdale, East, West and Central Royalties. There were a total of 126 entries and the adjudicator was Dorothy Allen of Mount Allison University. At an annual meeting in June 1946, it was decided to open the Festival to the entire province and to form an organization called the Prince Edward Island Music Festival Association. The Association was to sponsor the annual Festival in order to discover and encourage musical talent in Prince Edward Island.

Beginning in 1947, the Festival became a week-long event. Each year the Festival grew and by 1961, Prince Edward Island had the largest Festival in the Atlantic Provinces and the fourth largest in Canada. In 1953, the Association became a member of the Federation of Canadian Music Festivals, sending Island delegates to attend the Federation's annual conferences. In 1954 the first classes were adjudicated in Summerside and beginning in 1957 classes were also adjudicated in Montague. In 1965 the Prince Edward Island Association hosted the annual Federation Conference in Charlottetown. The Prince Edward Island Music Festival continues to take place annually each spring and remains a highlight among amateur musicians across the province.