The monastery was founded in the early 11th century by Senekerim-Hovhannes Artsruni, the Armenian King of Vaspurakan, on a preexisting religious site.

According to tradition, in the late third century, Saint Hripsime hid the remnant of the True Cross she wore on her neck at the site of the monastery.

In 653, when the location was discovered, Catholicos Nerses III the Builder built the Church of Surb Nshan (Holy Sign),[6] described by Robert H. Hewsen as "a simple hermitage".

[7][10] In 1021, when Vaspurakan fell to Byzantine rule, Senekerim-Hovhannes took the relic to Sebastia, where the following year his son Atom founded the Surb Nshan Monastery.

[6] Fearing an attack by Muslims, Father Ghukas of Varagavank took the True Cross in 1237 to the Tavush region of northeastern Armenia.

Its restoration was begun immediately thereafter by monastery father Kirakos who found financial support among the wealthy merchants in Van.

[6] The architect Tiratur built a square-planned gavit (narthex) west of Church of Surb Astvatsatsin (Holy Mother of God) in 1648.

[6] In 1779, father Baghdasar vardapet decorated the narthex walls with frescoes of King Abgar V, Theodosius I, Saint Gayane, Hripsime, Khosrovidukht, and Gabriel.

[6] A wall was built around the monastery in 1803 and, fourteen years later, the Church of Surb Khach (Holy Cross) was completely renovated and converted into a depository of manuscripts by archbishop Galust.

In 1832, Tamur Pasha of Van robbed the monastery's treasures and strangled the father Mktrich vardapet Gaghatatsi to death.

The school taught subjects such as theology, music, grammar, geography, Armenian studies and history; the prominent novelist Raffi was briefly one of the teachers.

This withdrawal coincided with the arrival on Varag mountain of some 3000 Armenian refugees from the Hayatzor valley who had escaped the massacres that had taken place there several days earlier.

They were soon joined by some 3000 survivors of massacres elsewhere, and together they found a temporary refuge in the Armenian villages and monasteries on the mountain, including Varagavank.

Self-defense units were also set up in an attempt to protect the villages; about 250 men, almost half the force, was stationed at Varag, with most of the remainder based at nearby Shushants monastery.

On the order of Van's governor, Djevdet Bey, Turkish forces returned in strength, with 300 calvarymen, 1000 militia, and three batteries of artillery.

The Turkish forces made no attempt to stop them entering the Armenian-controlled sectors of the city; it is speculated that they were deliberately allowed in so that they would use up the limited food supplies of the defenders.

[17] Another missionary teacher, Grace H. Knapp, recounted, however, that "On the 8th May we saw the place in flames, and Varak Monastery near by, with its priceless ancient manuscripts, also went up in smoke.

White, a scholar on Turkey, wrote in 2013 that, on her visit, the remains of the monastery "consisted of nothing more than a few brick vaults used to house goats amid a clutch of tumbledown Kurdish homes.

[34] Revolutionary Socialist Workers' Party (DSİP) activists demonstrated in early October 2012 before the Habertürk headquarters in Beyoğlu, Istanbul demanding the return of the monastery land to the Armenians.