VUFKU was established on 13 March 1922 under the National Commissar of Education of the Ukrainian SSR. A directive issued by the Commissar and the NKVD (Narodnyi komissariat vnutrennikh del) on 22 April 1922 transferred all movie theatres and all institutions and companies of photo and film industries located in Ukraine under the jurisdiction of VUFKU.
VUFKU became the owner of a large studio in Odessa, and two small studios (called ateliers) in Kiev and Kharkiv. It also leased a studio from the Crimean Commissar of Education in Yalta. In 1929 the largest VUFKU film studio opened in Kiev. Four films were produced in 1923, 16 in 1924, 20 in 1927, 36 in 1928, and 31 in 1929. In these years the technical-manufacturing personnel of the studios increased from 47 in 1923 to 1,000 in 1929. The number of movie theaters grew just as rapidly, from 265 in 1914 to 5,394 in 1928.