Nyakahanga Designated District Hospital was started way back in 1912 as a small first aid unit headed by a local dresser. In 1953 the unit was expanded into a 60-bed hospital which was extended to 200 beds in 1965, partly with Danida assistance. Swedish, German and Danish Lutheran churches have assisted the hospital with personnel, equipment and both minor and major improvements over the years.
Nyakahanga started to serve as a district hospital in 1972. In 1992 an agreement was signed to make it a designated district hospital. A board of Governors which draws members from the Government and ELCT Karagwe Diocese was formed. According to the agreement ELCT Karagwe Diocese retaines the hospital ownership.