The exact date of the monastery's founding is unknown, but it is believed to have been established in the mid-12th century by Saint Niphon, the Bishop of Novgorod, who may have been of Greek origin. The monastery, located near the Pskov border, was one of the cultural centers of the city. The Pskov Chronicle was written here, and it housed a library, a scriptorium, and an icon-painting workshop. The monastery was wealthy, occupying the entire floodplain of the Mirozha River, including the bank with forges and farmsteads. However, after the secularization of church lands in the 18th century, the territory of the monastery was reduced.

Due to its location outside the fortifications of Pskov, the monastery often became a vulnerable target for attacks from the western neighbors of Rus. In 1299, the Livonian knights, having devastated the Pskov settlement, burned the Mirozh and Snetogorsk monasteries, killing Vasily of Mirozh and the abbot of the Snetogorsk monastery, Joasaph, who were later canonized. According to tradition, the relics of the holy abbot Vasily rest beneath the altar of the Savior-Transfiguration Cathedral alongside the relics of Saint Abraham. In the early 16th century, the monk Cornelius of Pskov-Pechersk studied at the monastery.

In 1581, Stefan Batory placed cannons on the monastery's bell tower, from which he shelled the city.

In 1567, during the reign of Ivan the Terrible, the Mirozh Monastery became famous for the icon of the Mother of God, known as the Mirozhskaya, due to its miracles.

In the 19th century, the monastery housed many ancient icons, the chalice of Saint Niphon, the Gospel, a silver ladle gifted by Peter the Great to the Pskovite Fadey Gureyev, and two bells from 1520 and 1521. The monastery was abolished in the 20th century. After the 1917 revolution, the Pskov excursion station was located within its walls. Monastic life began to revive in 1994 when the Church of the First Martyr Stephen, the brotherhood building, and the abbot's house were transferred to the Pskov diocese under a lease agreement. At that time, an international icon-painting school was established under the guidance of Archimandrite Zinon. After Catholics were allowed to hold services and receive communion at the monastery, an anathema was imposed on it. In 1997, Metropolitan Eusebius consecrated a new icon-painting school.

On May 1, 2010, the entire complex of buildings and territories of the monastery, except for the Savior-Transfiguration Cathedral and the small cells, was transferred to the Russian Orthodox Church for gratuitous use. In 2011, an icon-painting school for children of Pskov began operating at the monastery.