The Guagua National Institute was the brainchild of Rev. Fr. Nicanor M. Banzali, former parish priest of Guagua, Pampanga. In 1918, he conceived the idea of founding an education institution to inculcate faith in God, search for knowledge and love of country in the minds of the youth, and to satisfy the educational needs of his parishioners, especially those of the poor. Then, only one elementary school existed in each town. Accordingly, with the encouragement and approval of His Grace, Monsignor Michael O'Doherty, Archbishop of Manila and the generous cooperation and support of handful of civic-spirited residents of the town, the Guagua National Institute started to operate on June 18, 1918, with the opening of classes in the primary grades. Classes were held at the old Guagua Catholic Convent.

Its founder and sympathizers did not dream at that time of establishing a university, nor even a high school. Before the school year 1918-1919 came to a close, the Secretary of Public Instruction, the Hon. Charles E. Yeater, authorized the school to offer the complete elementary course with an average size of 35 pupils in each grade. Mrs. Feliza D. Goseco was installed as its first Elementary School Principal.

During the school year 1919-1920, the high school department was opened with 32 students enrolled in the first year. The following year, there were only 16 students enrolled in the second year. In 1922, the third year class had only four students and as expected, the opening of the fourth year class was deferred for the following year because only three students actually enrolled. In 1924, fourth year class was opened with nine students.

The Guagua National Institute was granted government recognition by the Hon. E. A. Gilmore, the Secretary of Public Education, on March 17, 1925 to offer complete secondary course.

In 1932, following the transfer of Father Banzali to a new parish in Arayat, the school moved from the premises of the Guagua Catholic church to a temporary site, which was a residential house in barrio San Roque. However, due to the inadequacies of the place to meet the rigid requirements for schools, the Guagua National Institute has to be transferred to a bigger site infront of the national road in San Nicolas. On February 16, 1942, the three buildings were razed to the ground by a fire that enveloped important sections of the town of Guagua. A steady increase in its enrolment, both in the elementary and in the high school department, made it imperative to build two additional buildings. Between 1942 and 1946, classes were interrupted by World War II.

During the school year 1939-1940, it gained government permission to offer first year subjects in Junior Normal and Associate in Arts. During the school year 1941-1942, the Guagua National Institute had a total enrolment of 1,500 student from elementary, secondary and first year collegiate department

On January 1, 1946, the Guagua National Institute was able to acquire ownership of its present site in barrio Sta. Filomena and started putting up its buildings one after the other.