It was built by the city in 1526-1531 as a hospital and the new almshouse. The only medieval hospital building which survived in Estonia, its double-naved assembly hall section has maintained its initial spacial form and structure. In 1699-1770, the building housed the Spinning factory, which functioned as a women's reformatory under its high roof. Since 1733, it was used as the St. Michael's (Mihkli) church of the Swedish-Finnish congregation. The Baroque furnishings (the altar, the pul[it, the bapistry and the ceiling chandeliers) were brought from the earlier St. Michael's convent church. After the fire of 1770 the window and external walls' design was renovated, the high double-staged mansard roof was built, the entrance room was decorated with a beamed ceiling painted with rococo with floral-tendril motifs.
The two-storied annex of the hospital served as a retirement home until 1901. During the Soviet period the building was used as a gymnasium. With the assistance of the Swedish State, it was then renovated as the St. Michael's Swedish church and consecrated with the attendance of the Swedish Royal couple in 2002. The basement houses the Museum of the Estonian-Swedish church art.