The Nikolsky chapel was built on the site where the Nikolskaya Upper Posad Church, which existed since the 17th century, was destroyed in the 1930s. Previously, a cemetery surrounded the church, where, according to archaeologists, both noble residents of Nizhny Novgorod and ordinary townspeople were buried. According to legend, here, opposite the Nikolskaya Tower of the Kremlin, the bodies of soldiers who liberated Moscow in 1612 and died from wounds after the battle were laid to rest.

In the 20th century, a hotel named "Moscow" was built on the site of the destroyed church, which later burned down. In the late 1990s, during the construction of a new hotel, numerous human remains were discovered and handed over for safekeeping to the Nizhny Novgorod diocese.

On November 5, 2013, on Pozharsky Street, opposite the Nikolskaya Tower of the Kremlin, a church was laid in memory of the destroyed shrine in honor of St. Nicholas the Wonderworker, where a place for the burial of the found remains was provided.

On July 28, 2014, Metropolitan Georgy of Nizhny Novgorod and Arzamas consecrated the cross of the under-construction chapel, and on October 24, a memorial service was held here on the occasion of the reburial of the remains of Nizhny Novgorod residents found at the site of the "Moscow" hotel in Theater Square, Nizhny Novgorod. On November 4, Bishop Ilya of Balakhna and Deputy Governor of the Nizhny Novgorod Region Evgeny Lyulin unveiled a memorial plaque.

On December 18, on the eve of the feast day of St. Nicholas, Archbishop of Myra in Lycia, Metropolitan Georgy performed the Rite of Great Consecration of the chapel in honor of this saint and held the first Divine Liturgy in the newly consecrated church.

The chapel building is constructed using traditional techniques from red brick on a lime mortar. The interior is decorated with frescoes in the Byzantine style using natural materials. The frescoes depict scenes from the life of St. Nicholas. The church's dome is topped with an anchor-shaped cross, symbolizing hope for the Kingdom of Heaven; just as an anchor holds a ship on the waves, so the Church serves as an unshakeable stronghold for the faithful.