This hospital opened as the Melbourne Lying-In Hospital and Infirmary for the Diseases Peculiar to Women and Children in a terrace house in Albert Street, East Melbourne, in August 1856. It was founded by a group of evangelical ladies led by Mrs Frances Perry, wife of the Anglican Bishop of Melbourne, and two young doctors: one English, Dr John Maund, and one Irish, Dr Richard Tracy. Both doctors had studied in Scotland and Paris, and were determined to bring the latest in clinical medicine to the colony. They envisaged a clinical institution regulated by careful patient records and scientific papers. In 1858 the hospital moved to its present site in Grattan Street, Carlton, into premises designed by Tracy himself to the latest standards. In 1862 it became the first Australian hospital to train nurses; in 1865 it became the first specialist teaching hospital as Tracy was appointed lecturer in obstetrics at the new Medical School in the University of Melbourne. It became the Women's Hospital in 1884, and 'Royal' in 1956.
The hospital grew very quickly, delivering more women annually than many of its equivalents overseas. By the 1890s it was delivering over 1000 women a year, by the 1930s over 3000 and by the 1960s over 6000. A 'charity' hospital until the introduction of Medibank in 1974, it continues to admit largely women of limited means. Developing particular expertise in the treatment of puerperal and postabortal infection, pre-eclampsia, diabetes in pregnancy, neonatal intensive care and infertility, its clinical school has influenced standards in the practice of obstetrics and gynaecology throughout Australia. Midwives continue to conduct normal deliveries and instruct students. In 1996 it relinquished its independent board, amalgamating with the Royal Children's Hospital to form the Women's and Children's Healthcare Network, but in 2004 its independent board was restored.