The Government Factory was a sub-department of the Public Works Department, originally established in Pettah on Gas Workers Street in 1849. It was shifted to its present location in Kolonnawa in 1928, as a part or sub-department of the Public Works Department, to provide mechanical engineering support for the operation of many public institutions at that time.

With the splitting up of the Public Works Department into the Highways and Buildings Departments on October 1, 1969, and the subsequent creation of the Territorial Civil Engineering Organization in 1971, the Government Factory became a Class "A" Department, effective October 1, 1971.

The original role of the Government Factory was to provide mechanical engineering works, products, equipment, and allied operations, as well as the maintenance and repair of plant and machinery required for infrastructure development, the construction of roads, bridges, and ferry boats, irrigation water management, and building maintenance.

Once the Government Factory became a Class "A" Department, its functions have been operated under the Advance Accounts of the General Treasury. Over the last four decades, the Government Factory has been attached to the following ministries: Lands and Land Development, Housing & Construction, Housing & Public Utilities, and Urban Development, Water Supply & Housing Facilities, and is currently under the Ministry of Urban Development, Construction, and Housing.