A Primary Health Center was established in Kanchanpur district towards the end of 2020 B.S. In 2031 B.S., although approval was granted for 25 beds, due to a shortage of manpower, an inpatient department with 15 beds was set up, and it was upgraded to Kanchanpur District Hospital, where maternity services were also initiated.

In 2043 B.S., it was further upgraded into a 50-bed referral center zonal hospital. In 2045 B.S., a Hospital Development Committee was formed, and in 2053 B.S., the inpatient building was constructed.

In 2061 B.S., with resources from the Mahakali Hospital Development Committee, approval was obtained from the Government of Nepal to add 50 more beds, bringing the total capacity to 100 beds.

After the federal restructuring, the hospital, previously known as Mahakali Zonal Hospital, was renamed Mahakali Hospital. Recently, due to the expansion of services provided by the hospital, as per the decision of the Sudurpashchim Provincial Government (Council of Ministers) dated 2078/02/19 B.S., Mahakali Hospital has been designated as Mahakali Provincial Hospital.