According to church legends and hagiographic data, this monastery is the oldest in the Russian North and was founded in 1212 by monk Cyprian during the reign of Prince Konstantin Vsevolodovich of Rostov. The Veliky Ustyug chronicles of the 18th-19th centuries tell that the residents of Ustyug asked the saint to establish a monastery near the city. Cyprian chose a location "by the lakes behind a cautious slope" and built the monastery with wooden churches in honor of the Entry into the Temple of the Most Holy Theotokos and Archangel Michael.

It is known that the monastery already existed in 1521 when it received an uncondemned charter from Grand Prince Vasily Ivanovich.

In 1651, a fire destroyed the wooden structures of the monastery, after which the construction of the first stone buildings began. Between 1653 and 1656, the Mikhailo-Arkhangelsky Cathedral and the church of the Entry with a refectory were erected. In 1682, the Vladimir over-gate church was built. In 1710, a small stone church of the Mid-Pentecost appeared on the site of the chapel over the grave of St. Cyprian. In the first half of the 18th century, two-story abbot and brotherhood cells were constructed.

Since 1842, the Trinity-Gleden Monastery was attached to the monastery, and since 1860, the Lalsky Mikhailo-Arkhangelsky Monastery.

In 1919, the monastery was closed by the decision of the executive committee of the Veliky Ustyug Council of Workers', Soldiers', and Peasants' Deputies, and its buildings were used to organize a concentration camp. By 1924, the buildings of the Mikhailo-Arkhangelsky Cathedral and the Vladimir over-gate church were transferred to the Veliky Ustyug Museum. During the war, the territory of the monastery housed the Pukhovich Military Infantry School. Since September 1945, it has been home to an automotive technical school.

As of 2011, the Mikhailo-Arkhangelsky Monastery is listed in the Vologda Diocese of the Russian Orthodox Church as inactive. On July 16, 2014, Bishop Ignatius issued a decree to establish the Orthodox religious organization Archpriest's Courtyard "Mikhailo-Arkhangelsky Monastery."