It became infamous for construction faults resulting in partial collapse, as well as a 1942 fire which destroyed a wooden outbuilding, claiming 37 lives (39 in other sources), because the victims were trapped in a locked ward.

[2][3] The asylum was less than 20 miles north of Dunedin and close to the county centre of Palmerston, in an isolated coastal spot within a forested reserve.

In 1875, the Provincial Council decided to build a new structure on "a reserve of fine land at Brinn's Point, north of Port Chalmers".

Initial work was begun in the "dense trackless forest" in 1878, though the Director of the Geological Survey criticised the site location, because he felt that the hillside was unstable.

Known for designing in a range of styles, including the Gothic Revival,[7] he started work on the new asylum in 1874, and was involved with it until the completion of the main block in 1884.

"[8] The asylum was progressively added to in later years as it was transformed to function as a working farm, though most of the newer buildings were much simpler wooden structures.

[4] Treatment of the patients at Seacliff, whether insane, intellectually disabled or held in the institution for what would today be classed as simply being difficult,[12] was often very callous, even cruel, a feature of many mental asylums of the times.

Patients were 'prescribed' fresh air, exercise, good nutrition and productive work (for example, in on-site laundries, gardens, and a forge) as part of their therapeutic regime.

[3][19] After the fire was noticed by a male attendant, the hospital's firefighters tried to extinguish the flames with water from a close-by hydrant, while two women were saved from rooms that did not have locked shutters.

[19] An inquiry into the fire criticised the lack of nursing staff, but praised the firefighters for their prompt and valiant actions, including the quick evacuation of many other patients in nearby threatened buildings.

In the summer of 2006-2007, regular guided tours of the hospital grounds were operated in conjunction with the Taieri Gorge Railway's Seasider tourist train service.

[5] In November 2023, a femur and patient tag were found in a shallow grave under a tree in the reserve, leading to a police investigation.