This facility has a history that dates back to as early as 1798. The property started out as a County Almshouse to treat the poor, mentally insane, and neglected. The site saw redevelopment in 1898 when other facilities began to open to house and treat the mentally ill. The redevelopment turned the facility into a "working community" where patients would learn various life tasks. By 1900, the facility started seeing transfers of patients from already overcrowded state hospitals. The property was officially acquired by the state from the county in 1914.

After the state took control of the property, modern buildings were added to the site. Eventually, the entire state hospital would be compromised of modern buildings with no character. All original buildings would be demolished decades before the hospital's closure. The hospital was cited as one of three model hospitals for the care of psychiatric patients in the United States. Unlike many other facilities of its kind, the "Iron Hill State Hospital" did not see negative publicity over terrible acts committed by staff and patients. During the 1970's deinstitutionalization, a juvenile detention center was housed in a few buildings on campus. The PA State Police took over the former nurses cottage as their local barracks. In 1980, the hospital shut down for good, being the second state hospital to close due its smaller size. After its official closure, several out-patient clinics occupied the buildings for various periods of times. Eventually the entire campus would be abandoned, leaving a mix of clean buildings and structures abandoned since 1980 and falling apart.