Oman Air can trace its root back to 1970, when Oman International Services (OIS) was established. The company became a civil aircraft ground handling provider at Beit Al Falaj Airport. In 1972, OIS moved its operations to the new terminal at Seeb International Airport. The company took over Gulf Air's Light Aircraft Division in 1977, before establishing Aircraft Engineering Division in the same year. Rapidly expanding civil aviation industry of Oman led OIS to the building of several facilities, including hangars, workshops and in-flight catering,  to cater for the increase in activity.

In 1981, Oman Aviation Services became a joint-stock company. OAS purchased 13 aircraft from Gulf Air, allowing the company to replace its turboprops Fokker 27 with the −500 series. The following year, Oman Aviation Services jointly commenced jet services, along with Gulf Air, to Salalah. From 1983 to 1993, the company purchased new equipment, including the Cessna Citation, and new facilities to help it improve its services.

In 1993, Oman Air was founded. The airline's start was in March, when a wet-leased Boeing 737-300 from Ansett Worldwide Aviation Services (AWAS) flew from Muscat to Salalah. In July of the same year, the airline's first international flight was operated to Dubai, also using a Boeing 737–300. Flights to other destinations quickly followed, with Trivandrum (Thiruvananthapuram) services starting in November, Kuwait and Karachi in January 1994, and Colombo in October.

In 1995, two Airbus A320s were wet-leased to replace the 737s. From 1995 to 1997, services were commenced to Mumbai, Dhaka, Abu Dhabi, Doha and Chennai. In October 1998, Oman Air was admitted in the international aviation industry trade group International Air Transport Association (IATA). By the end of the following year, Gwadar, Peshawar, Jeddah and Al-Ain were included in the airline's  route network, although the former two, along with a host of other destinations, were withdrawn in 2000.

From the late 1990's Oman Air started to receive other types of aircraft to supplement its existing fleet and began to expand with more international destinations. It took delivery of Airbus A310, Boeing 737-400/700 in 1999 as well as other more modern examples of the 737-800 version from 2001. It also revised its colour scheme in the new century, though it wasn't long till it would redesign its colours again. 

In March 2007, the Omani government recapitalised the airline, which saw the government increasing its shareholding from approximately 33 to 80 percent. It was also announced that Oman Air would be re-evaluating its strategic plans, with a possibility of entering the long-haul market. This culminated in the announcement by the government in May 2007 that it would be pulling out of Gulf Air, and would instead concentrate on developing Oman Air. This also came with a change of logo, colour scheme and livery which was began to apply to the first new aircraft as they arrived into the fleet. 

Oman Air commenced its long-haul services on 26 November 2007 by launching flights to Bangkok and London. On 2 April 2007, Oman Air announced it had placed a firm order with Airbus for 5 Airbus A330 aircraft for delivery in 2009. At the 2009 Dubai Air Show, Oman Air finalized the order, which involved 3 A330-300s and 2 A330-200s. Deliveries started during the third quarter of 2009. In February 2009, Oman Air announced intentions to lease another 2 A330-200s from Jet Airways. During the 2009 Dubai Air Show, Oman Air also finalised an order for five Embraer 175 aircraft with another 5 options, which the airline received from 2011.
In March 2010, Oman Air became the first airline in the world to offer both mobile phone and Wi-Fi Internet services on selected routes. By November 2010, the Omani government held a 99.8 percent stake in the airline. 

During September 2013, Oman Air was studying to move to a 50 aircraft strong fleet by 2017. In April 2015, Oman Air announced it would phase out its smaller aircraft to focus on an all Airbus and Boeing fleet. The 2 ATR 42-500 aircraft were withdrawn by the end of 2015 while the 4 Embraer 175 and the Boeing 737-700 aircraft were retired by the end of 2016. The first Boeing Dreamliner new generation airliners for Oman Air arrived in October 2015, which marked the start of the deliveries for the next 5 years. In April 2017 Oman Air announced plans to replace the A330s with more new Boeing 787s.

In January 2018, Oman Air took delivery of the first of the medium range Boeing 737 8 Max aircraft for its medium haul routes.