The chapel was founded after an incident that took place on July 10, 1902, when two drunken sailors started throwing stones at a house near the bridge leading to Manoel island.

One of the stones became stuck between the glass and an image of Our Lady of Mount Carmel in a small shrine on the wall of the house.

The image and stone were carefully removed and preserved in the parish church of Our Lady Star of the Sea in Sliema.

After some years the mage was returned to Gżira and a small chapel was built to house the image.

On July 7, 1913, Archbishop Pietro Pace made the small chapel a vice-parish church serving the locals under the authority of the parish of Sliema.