In 1656, a stone church was built in honor of the Merciful Savior at the eastern altar wall of the Annunciation Cathedral, funded by the nobleman Ivan Andreyevich Miloslavsky. This is evidenced by an inscription on a white stone slab in the southern wall of the temple, indicating that Miloslavsky built the church "with his own funds in memory of his parents and for his own eternal remembrance."

After the October Revolution of 1917, the Church of the Merciful Savior shared the fate of the Annunciation Cathedral. From 1918 to 1923, it was rented by the community of believers of the Annunciation Cathedral. In the spring of 1922, under the pretext of helping the starving in the Volga region, church valuables were confiscated, and two 17th-century tombs in the Miloslavsky burial vault were opened in search of treasures. However, besides human remains and cypress icons, nothing was found, and the tombs were closed. In 1923, the Savior Church was transferred to the Kirzhach Church and Domestic Museum, and in 1924 it was registered with the Museum Department of the Main Science of the RSFSR People's Commissariat as a monument of history and architecture. Since 1924, part of the museum's exhibition was housed in the basement of the Savior Church, including paintings, furniture, weapons, clothing, headgear, a carriage, and other items from the estates of Kirzhach landowners, such as Prince I.N. Vadbolsky and Count Saltykov. Saints, locks, dishes, sewing tools, coins, and more were also exhibited. The museum faced a severe lack of funds and could not ensure the preservation of the exhibits. Like the Annunciation Cathedral, the Savior Church was not heated or repaired during this period. After the plundering of the Kirzhach Museum in 1929, the church was left abandoned. In the summer of 1930, the Kirzhach City Council began the destruction of the Savior Church, but this illegal action was halted by the Main Science of the RSFSR People's Commissariat. In the following decades, the church was subjected to looting and destruction. All stone tombstones and the white stone slab with the builder's name disappeared from the Miloslavsky burial vault. In 1963-1964, the Church of the Merciful Savior was restored along with the Annunciation Cathedral. A dome and cross covered with shingles were installed, and the door and window openings were repaired, but no interior repairs were made. In 1983, the city authorities of Kirzhach planned to use the monastery churches for public needs, arranging a youth club on the first floor of the Savior Church and gaming machines on the second. However, in 1990, the church was handed over to the Russian Orthodox Church. On July 1, 1990, Priest Stefan Benzyuk conducted the first Divine Liturgy there after a long break. In 2008, external restoration of the church was carried out, painting it in traditional yellow and white colors, and the dome and cross on the bell tower were renewed.