Montenegro's ruler, Sovereign Prince Nicholas I (later King Nicholas I of Montenegro),  built the Prince "Danilo I" hospital in 1873. The first Montenegrin hospital was designed according to a project created by Dr. Frilley, personal physician to the Royal Court and to the Sovereign Prince. The hospital was named after King Nicholas's uncle and predecessor as Montenegrin Sovereign, Sovereign Prince Danilo I.King Nicholas financed the construction of the hospital with his personal resources, auctioning tributes and gifts received for the baptism of his son and heir, Hereditary Prince Danilo, who was also given the name of his illustrious predecessor.

           The Hospital admitted its first patients in 1875, these were wounded soldiers from the front lines of the Herzegovina uprising. Initially the hospital had no more than 25-30 beds. Dr. Valerije Tomić, from Pučišće on the island of Brač was the first doctor and superintendent at the hospital. In 1912 the Hospital was reconstructed and considerably expended and from that time, until the outbreak of World War I, it treated more than 20,000 patients.

           A new building was introduced in 1964 and reconstructed following a major major earthquake in 1979. From 1985 the hospital has consisted of seven wards with 100 beds. It has 169 members of staff, made up from 27 doctors, 95 nurses and 47 nonmedical staff.