PSDF was established in year 2010 as a section 42 company through an agreement between the Government of the Punjab (GoPb) and Foreign, Commonwealth & Development Office (previously Department for International Development (DFID). The Fund was established to provide skills trainings to the poor and vulnerable youth of Punjab between the ages of 18-29 of which 40% were women, to provide access to sustainable income generation opportunities to the youth for better livelihoods.  

Through the partnership, trainings were initiated under the Punjab Economic Opportunities Program (PEOP) and successfully trained 145,000 youth of Punjab from year 2010-15. The partnership between PSDF and FCDO continued and was succeeded by The Skills Development Programme (SDP). Under SDP, 320,000 trainings were completed successfully across 10 economic sectors and 36 districts of Punjab, over the course of five years 2016-21.