Founded in 1857 at a time when the European powers were competing to open pilgrimage complexes in Ottoman Jerusalem, the Austrian Hospice officially opened on March 19, 1863. Until 1918, the hospice also served as the residence of the Austrian consul in Jerusalem, who acted in a protective function for the polyglot empire's Catholics and Ashkenazi Jews who had settled in the Holy Land.
The lively pilgrim trade ceased with the outbreak of World War I but resumed again after 1918, necessitating the addition of another floor in 1932-1933 under the supervision of the Vienna-born Jerusalem building contractor Gottlob B uerle.
With the outbreak of World War II in 1939, the hospice was confiscated by the British authorities as Nazi property. It served as an internment camp for Austrian, German and Italian priests and members of religious orders.
When the British quit their Mandate in Palestine in 1948, they advised King Abdullah's Arab Legion to set up a military hospital there. It was later converted to a civilian hospital by the Jordanian government.
In 1985, the hospital was closed on sanitary grounds and handed back to its Austrian owners. After a complete renovation, pilgrimage activities resumed in 1988.