[1] Gudhem, a name signifying "Home of the Gods", was according to tradition a holy place of worship already before Christianity.

According to the saga, one hundred images of the thunder god Thor were placed in Gudhem.

According to a popular legend, Gudhem Abbey was founded in 1052 by Gunnhildr Sveinsdóttir, Queen Dowager of Sweden and Denmark, who returned to a life of penitence in her estate in Västergötland in Sweden, after her marriage with king Svein II of Denmark was annulled by the Church.

Charles VII of Sweden donated the royal estate of Gudhem Manor to the Abbey during his reign (1161–1167), and the nunnery was by then described as newly established.

[2] During the Swedish Reformation in 1527, the abbey was confiscated by the crown in accordance with the Reduction of Gustav I of Sweden, in the following year it was granted to the nobleman Nils Olofsson.

The former nuns however, were granted an allowance from the properties formerly belonging to the abbey and the right to live in the building for life.

The last abbess asked the King to rebuild the abbey, but her request was not granted, and the nuns were housed by the surrounding peasantry.