Early versions of the Ao Dai date back to 1744, when  men and women to wear a trouser and gown ensemble that buttoned down the front. Although popular, men wore it less often than women, and generally only on ceremonial occasions such as at weddings and funerals. It took another twenty years before the next major design change occurred and nearly another two hundred years before the modern Ao Dai emerged.

The original Ao Dai was loosely tailored with four panels (Ao Tu Than), two of which were tied in the back. In 1930, a Vietnamese fashion designer and writer, Cat Tuong, lengthened the top so it reached the floor.  Tuong also fitted the bodice to the curves of the body and moved the buttons from the front to an opening along the shoulder and side seam. As a result of these changes, Ao Dai became a contoured, full-length dress.  The dress splits into a front and back panel from the waist down. During the 1950s two tailors in Saigon, Tran Kim of Thiet Lap Tailors and Dung of Dung Tailors, started producing the gowns with raglan sleeves. This created a diagonal seam running from the collar to the underarm and is the preferred style today.

There have been many stylish alterations in color and collar design in the past four decades. Most noticeable is the gradual shortening of the gown's length, such that today, it is usually just below the knee. Variations in the neck collar, between boat and mandarin style, are common.  But more adventurous alterations such as low scooped necklines, puffed sleeves, and off-the-shoulder designs are emerging as more women experiment with fashion. Less rigid control over color and access to new fabrics have also created dazzling results. Every Ao Dai is custom-made, accounting for the fit that creates a flattering look for each woman.

It is hard to think of a more elegant, demure and yet sexy outfit, that suits Vietnamese women of all ages than the Ao Dai.