The Danvikens hospital was founded by the initiative of King Gustav Vasa in 1558.

The current building is designed by Göran Josuæ Adelcrantz (1668–1739) and dates back to 1718–1725.

The hospital is frequently mentioned within literature and during the 18th and 19th centuries; the name Danviken was used in common language as a synonym for a "Mad House".

A famous description of the Danviken Asylum was Fältskärns berättelser (The tales of a Feldsher) by Zacharias Topelius from the 1780s.

The facilities were emptied in 1861 and the asylum closed in 1863 because of the decaying buildings.