Isuzu's history can be traced back to its earliest antecedent company, Tokyo Ishikawajima Shipbuilding & Engineering Co., Ltd., which was established in 1893. In 1916, this company diversified into car making, using capital amassed from its highly profitable shipbuilding business (Isuzu's foundation year) and in 1918, started a passenger vehicle production venture in a tie-up with the British automaker Wolseley Motor Ltd. In 1922, Tokyo Ishikawajima Shipbuilding & Engineering succeeded in localizing production of the Wolseley A9 - the first passenger car ever made in Japan. This achievement was followed in 1924 by the completion of the first Japanese-built Wolseley CP 1.5-ton payload truck qualified as an official military truck by the Japanese government.
In 1927, Tokyo Ishikawajima Shipbuilding & Engineering ended its tie-up with Wolseley and began manufacturing the 100% localized vehicles of its own design. An early example was the "Sumida", developed in 1929, which was equipped with an A6 or an A4 engine and realized excellent power and fuel consumption.

In the same year that the "Sumida" appeared, the Car Department was split off from Tokyo Ishikawajima Shipbuilding & Engineering and established as an independent company named Ishikawa Automotive Works Co., Ltd. The late 1920s was a period when car ownership was beginning to expand in the aftermath of the 1923 Great Kanto Earthquake, as automobiles were demonstrating their potential to speed the pace of recovery following the disaster. In view of the growing demand for motor vehicles, the Japanese Government promoted domestic automobile industry. In 1933, Ishikawa Automotive Works responded by launching the "Isuzu", a government standard model car named after the Isuzu River that flows past the Japan's oldest shrine, the Ise Shrine of Mie prefecture. The company's present name was later taken from that of the car.

In 1933, Ishikawa Automotive Works merged with DAT Automobile Manufacturing Inc. to establish a new company called Automobile Industries Co., Ltd. This company poured its energies into the development of diesel engines, a technology that had not yet been commercially established even in the advanced nations of Europe and North America, and by 1936 the company had succeeded in developing two air-cooled diesel engine models, the DA6 and the DA4. These early diesels were to serve as the foundation of all later generations of Isuzu diesel engines.