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In 1894, construction was started in Salem on a building designated to be the Oregon Mute School. The school was abandoned only a short time later because of a lack of adequate roads to its relatively secluded location. Its empty buildings were used to house the newly commissioned Oregon State Tuberculosis Hospital, which began admitting patients in November of 1910.

H. J. Clement, M.D., was superintendent in 1910 and 1911, and administered the medical program and business. Several new buildings were completed during this period. Later, in 1913, G. C. Bellinger, M.D. became superintendent. He would remain superintendent until his retirement in 1954.

During the first few years, patients came very slowly, as the idea of a tuberculosis sanatorium was new to the public. Soon, however, the hospital was forced to form a waiting list as the demand for treatment exceeded the supply of beds. Starting from only fifty beds in 1910, Oregon State Tuberculosis Hospital expanded to 120 beds in 1920, many of which were in open-air pavilions. For the next few decades, the hospital continued to have a significant waiting list, and so kept expanding with new pavilions.

In 1963, the State Legislature combined the Oregon State Tuberculosis Hospital in Salem with the University of Oregon Medical School State Tuberculosis Hospital, which was opened in 1939 on the University's Portland campus. As a result, patients located in the University State Tuberculosis Hospital on the Portland campus were transferred to the State Hospital in Salem.