Lala Lajpat Rai, a prominent figure in pre-Independence India, established the Gulab Devi Trust in 1927 in memory of his mother, Gulab Devi, who died of Tuberculosis (TB) in Lahore. The Trust acquired 40 acres of land in 1930 and received an additional 10 acres from the Punjab Government. Construction of the hospital began in 1931 and was completed in 1934. The hospital was inaugurated by Mahatma Gandhi on July 17, 1934, and opened its doors to TB patients.

After the migration of trustees in 1947, new trustees, including Begum Raana Liaquat Ali Khan, were appointed in 1948. The hospital was managed by a committee with Begum Raana as chairperson. Over the years, leadership passed through several prominent figures, with Syed Wajid Ali serving as Chairman for Life until his death, followed by Syed Shahid Ali and others.

The hospital, initially with 50 beds at the time of independence, has grown into the largest chest hospital in South Asia, now with 1,500 beds. It offers comprehensive care, including a specialized cardiac wing established in 1984.