The history of the monastery begins with the appearance of the hermit Dionysius in the remote Moksha forest. According to legend, around 1650, Dionysius settled five versts from Krasnaya Sloboda, on the banks of the Moksha River, in a pine forest. He built a cell, conducted church services, and worked for God and the salvation of his soul. In 1652, peasant Putilka Dmitriev Bazhenov secured all his lands for the new desert, as Dionysius's cell was called. The residents of Krasnaya Sloboda went to Moscow to obtain permission from Patriarch Nikon to build a church in this desert. They received a blessing for the construction of the church.

The foundation of the Spaso-Transfiguration Monastery is confirmed by a decree from Patriarch Nikon dated August 6, 1655. Until 1930, it was kept in the monastery, then in the local history museum, where it disappeared in the early 1970s. The decree mentioned the request of the residents of Krasnaya Sloboda to build a church in the name of the Transfiguration of the Lord. Patriarch Nikon gave his blessing for the construction and the provision of antimins.

The construction of the church did not take much time, and by February 1656, the Kazan Church was consecrated. The first abbot was monk Arseniy. For the first one and a half centuries, the monastery developed slowly, resembling more of a skete. In 1682, the monastery owned 1439 desyatinas of land, with 16 monks and 45 novices living there.

In 1702, the igumen asked Peter I to resume the issuance of bread and monetary allowances so that the monks would not die of hunger. In response, land was granted to the monastery. In the second half of the 18th century, of the four monasteries in Krasnaya Sloboda, only the Spaso-Transfiguration Monastery remained, albeit unofficially. By the end of the 18th century, the monastery owned 1292 desyatinas of land, including arable land, hayfields, and forests.

Among the notable monks of the monastery was Elder Gerasim, the founder of the desert on the Rybka River. He came to the monastery during the time of Dionysius and later became its abbot. Gerasim lived as a hermit, engaged in gardening, and distributed money to the poor. After his death around 1700, his grave became a revered shrine.

In 1793, the abbot of the monastery became hieromonk Gennady, who actively developed the monastery. Under him, the construction of a stone monastery began. In 1799, the Transfiguration Cathedral was built, and in 1817, the Alexander Nevsky Church was consecrated.

By 1917, the monastery represented a completed complex in the style of classicism. In 1928, the monastery was closed and destroyed. In 1995, the monastery was revived, and since 2004, its restoration has been ongoing. Currently, seven monks reside in the monastery.