The Church of the Intercession of the Mother of God on Krasnaya Gora was founded shortly after the establishment of the Velikoustyug Diocese in 1687. The peasants living nearby, who were parishioners of the John the Baptist Convent, wanted to have their own parish church. In 1687, they requested to obtain the old wooden church of the John the Baptist Cathedral, which was already in disrepair and due for demolition. With the blessing of Archbishop Alexander of Ustyug and Totma, a church in honor of the Intercession of the Mother of God was built on Krasnaya Gora, which was consecrated on June 27 of the same year.

In 1702, with the blessing of Archbishop Joseph of Veliky Ustyug and Totma, a wooden cold church in honor of All Saints was erected next to the Intercession Church. In 1715, on the site of the warm wooden Intercession Church, with the blessing of the same archbishop, a stone church was built and consecrated on September 11 of the same year. In 1768, the construction of a stone church to replace the dilapidated wooden church in honor of All Saints began, with the blessing of Bishop John of Veliky Ustyug and Totma. The construction lasted twelve years, funded by the parishioners and merchant Grigory Zakharov, and the stone church was consecrated on June 10, 1780, by Bishop John. In 1778, an altar in honor of the Holy Martyrs Flora and Laurus was added to the northern side of the warm Intercession Church, consecrated on November 26, 1779, by Archpriest Afanasy Vasilyev of the Assumption Cathedral. The bell tower of the church was built in 1779. The warm church in honor of the Intercession of the Most Holy Theotokos had two domes: one large on the main church and one small above the altar of Flora and Laurus.