The Private Sector Development and Infrastructure Vice Presidency (PSIVP) was launched in February 1999. The establishment of PSIVP was the result of the termination of the former Finance, Private Sector Development and Infrastructure Network (FPSI) in January 1999, and a renewed effort by World Bank President James D. Wolfensohn to more closely integrate the operations of the Bank and its affiliate of the International Finance Corporation (IFC), especially in the areas of private sector development and infrastructure. To facilitate this integration, Wolfensohn appointed Peter Woicke to serve in a dual role of IFC Executive Vice President and Managing Director for the World Bank. The newly created PSIVP and its subordinate departments were created as a joint IFC and Bank vice presidency, and reported directly to Woicke. Nemat Talaat Shafik was appointed Director of PSIVP in February 1999, and also reported to Woicke.

The functions and staff of the FPSI departments of the Private Sector Development Department (PSD), the Energy, Mining, and Telecommunications Department (EMT), and the Transportation, Water, and Urban Development Department (TWU) were transferred to PSIVP at its establishment. PSD and parts of EMT were later mapped into the following newly established joint IFC and World Bank departments: the Private Sector Advisory Services (PSAS); the Small and Medium Enterprise Department (SME); the Oil, Gas, and Chemicals Department (COC); the Global Information and Communications Technologies Department(CIT); and the Mining Department (CMN). In 2001, transportation, water, energy, and urban development functions were mapped into the newly organized Energy and Water Department (EWD) and the Transport and Urban Development (TUD). EWD and TUD were not joint Bank and IFC departments, but still reported to the PSIVP. In 2002, CMN was merged with COC to form the new Oil, Gas, Mining, and Chemicals Department (COC) in PSIVP.

In May 2003, PSIVP was terminated and its functions and staff were spilt among the new joint IFC and World Bank Private Sector Development Vice Presidency (PSDVP) and the Bank's Infrastructure Network (INF). PSAS and SME were mapped into PSDVP. COC, CIT, EWD, and TUD were mapped into the INF Network.