The chapel was erected in memory of the miraculous salvation of the family of Alexander III during a railway disaster on October 17, 1888. This event triggered a surge of religious and patriotic feelings in Yaroslavl, as well as throughout Russia. In honor of this event, not only chapels were built, but also churches, such as the Tikhvin Church across the Volga in Tveritsy. In October 1888, a solemn prayer service took place in Ilyinskaya Square, after which Yaroslavl merchants, driven by love for the tsar, decided to create a holy icon with the collected funds and place it in the chapel of the Customs House. An eternal lamp was to burn before the icon, and a thanksgiving prayer service was to be held annually on October 17. A commission created to implement this idea inspected the existing chapel and deemed it unsuitable for housing the icon due to its dilapidation and unsatisfactory condition. It was proposed to demolish the old chapel and build a new one. The project was entrusted to provincial architect Nikolai Ivanovich Pozdeyev, and the construction was overseen by the city mayor Ivan Nikolayevich Sobolev. The main expenses were covered by merchant Konstantin Mikhailovich Ognyanov. The laying of the chapel took place on October 17, 1889, in the presence of city authorities. The chapel is a tent-shaped church with a single apse, adorned with a decorative dome. The western porch is topped with a tented canopy. The architectural style resembles a tent bell tower with rich brick decor, characteristic of Russian architecture of the late 17th century. The tent is covered with gray ceramic tiles, imitating ancient shingles. The carved oak iconostasis was made according to a design by N. I. Pozdeyev, and the icons were commissioned from the Palekh master Fyodor Galanov. The chapel was consecrated in honor of the heavenly patrons of the royal family members, such as Prince Alexander Nevsky and others, and is commonly referred to as the Chapel of Alexander Nevsky. Every year on October 17, a procession from the Assumption Cathedral with an image of Nicholas the Wonderworker from the Nikolai-Babaevsky Monastery approached the chapel.

The exact date of the chapel's closure is unknown, but services were still held there in 1929. Later, the porch was dismantled, and the chapel housed a "Beekeeping" shop, a dry-cleaning workshop, and a dyeing facility. In the late 1970s, when a building for the regional party committee began to be constructed nearby, there were plans to demolish the chapel, but thanks to the efforts of architects and heritage protectors, the monument was preserved. In 1982 and 1984, reconstruction was carried out, during which the porch was restored. For some time, the chapel housed an exhibition hall of the Yaroslavl Art Museum.

In June and September 2002, the interior of the chapel was painted by masters from the "Yaroslavl Icon" school under the guidance of Nikolai Alexandrovich Mukhin. On December 6, Bishop Kirill, recently appointed as the Bishop of Yaroslavl and Rostov, consecrated the chapel.

Currently, the chapel belongs to the Kirillo-Afanasiyevsky Monastery.