The Grace Maternity Hospital had its beginnings as Harrow House, opened in 1906 by the Salvation Army as a residential maternity hospital for unmarried women. Dr. P.A. MacDonald served as medical superintendent and physicians volunteered their services. Following the 1917 Halifax Explosion, the need for a dedicated maternity institution for all women was recognized by the Halifax Medical Association, and Dalhousie University offered the Salvation Army both the land and the money to build and run the new hospital.

The Grace Maternity Hospital opened on 29 April 1922 as the only independent maternity hospital in Canada; it was affiliated as a teaching hospital with the Dalhousie's Department of Pediatrics. Located on the east side of Robie Street on the block bounded by University Avenue and College Street, it initially accommodated 65 mothers and babies. Major renovations were made in 1956, 1962, 1973 and 1977, after the Halifax Infirmary stopped taking maternity cases. By the 1970s the Grace occupied half a city block with 126 adult beds and 166 bassinets with 40 in the neo-natal intensive care unit (NICU). In 1992, the Izaak Walton Killam-Grace Health Centre for Children, Woman and Families (IWK-Grace) opened, amalgamating administrative and operational services between the two hospitals.