In the late 1920s, an appeal was launched to found a hospital for the orthopaedic treatment of physically disabled children in south-eastern Scotland.

The majority of cases came from osteomyelitis and tuberculosis infections, and prevailing medical opinion of the time held that open-air treatment was beneficial.

[1] A residential block for nurses was built in 1935, designed by Reginald Fairlie, and later registered as a Grade B listed building.

On the foundation of the National Health Service in Scotland in 1948, the Princess Margaret passed into state management, grouped with the Edinburgh Central Hospitals.

[2] The initial plans for the second phase had relied on adapting the existing Orthopaedic Wing, a listed building, but this was demolished after an arson attack in 2002.

It was replaced by a new development with six flats and seventeen terraced houses, under the name "Princess Gate", designed by Malcolm Fraser Architects.