The Chapel of the Good Shepherd dates back to 1888, when George N. Bliss, a New York banker, paid for it through the New York Episcopal Mission Society. The Chapel cost him $80,000 over the two years of its construction, even though the first estimate he had been given was a mere $5000.

The Chapel was intended for the use of the inmates of the Almshouse situated on the Island, then called Blackwell's Island after the Blackwell family, which owned the Island until the City bought it in 1828. It had a seating capacity of four hundred. It had a large reading room, a robing room for the clergy and a room for the use of the Mission Society workers in the basement.

The Chapel was designed by the architect Frederick Clarke Withers, an Englishman trained in Great Britain. He moved to New York in 1852 and, in 1888, formed a partnership with Walter Dickson. The two together designed several buildings on the Island, including the Strecker Memorial Laboratory and three brick structures for the Almshouse. The high Victorian Gothic Jefferson Market Courthouse, located in Greenwich Village, is the best known of Withers's New York City work.

Primarily an ecclesiastical architect, Withers was a strong advocate of the Gothic style for churches and the Chapel of the Good Shepherd illustrates his conceptions of what a church should be. In his book, Church Architecture (1873), Withers recommends the combining of different materials for picturesque effect. The exterior of the Chapel is constructed with a number of materials and the red brick is interspersed with gray brick in a modified version of Flemish bond. Brownstone window and door enframements contrast with the brick and rough-faced gray stone of the basement story. This gray stone, used for most of the institutional buildings on the Island, is the gray granite, or gneiss, which was quarried on the Island since the 18th Century.

Two ascending stairways lead inside. Originally, men and women from the Almshouse used separate entrances to reach the interior of the Chapel. The nave terminates in the chancel and semicircular apse. At the northeast, the bell tower, with broach spire, provides a strong and effective note of asymmetry. The bell of the tower, now displayed in the plaza, is five-toned, as Withers found single-toned bells "doleful and monotonous."

The large Gothic rose window of the entrance facade is set within a brownstone pointed-arch enframement decorated with carved roundels. A third roundel is located near the apex of the gable. The original stained-glass windows have geometric patterns except in the five windows of the apse, which depict the four Evangelists, surrounding Christ, the Good Shepherd. The relative austerity of the design was probably considered the most suitable for a poorhouse chapel.

An interesting anecdote about the completion of the Church involves the monogram FCW inscribed on the wrought iron finial on the stone spire, visible to the naked eye. They are the initials of the architect, Frederick Clarke Withers. The priest of the Chapel, Rev. W. G. French, thought they were his initials, WGF, and went to thank the archdeacon at the office of the City Missionary Society. It was thought best not to inform him of the error of his understanding, as the monogram could easily have stood for either of the two men's names, being so similar looking.

During the 20th Century, many of the institutional buildings on the Island became obsolete, and ferry service to the Island was discontinued in 1956. The Chapel closed its doors in 1958. It reopened only in October of 1975, after restoration by the New York architect Giorgio Cavaglieri, who had earlier adapted the Jefferson Market Courthouse to a library. The red-brick plaza surrounding the chapel was designed by the architectural firm Johansen and Bhavnani.

In 1976, the Landmarks Preservation Commission found that the Chapel had a special character and designated it a Landmark Building. It was found to be "a fine example of the late Victorian Gothic style, a work of superb craftsmanship designed by a prominent British-born 19th Century architect," that for several years had "played an important role as the chapel of the City's Almshouse," and in its new surroundings it provided "an interesting and charming contrast to the new housing."

The Chapel has not been restored since 1975 and seems to be in need of "a millennium George Bliss" to do the job. As Sister Regina Palamara says, "We need some rich person to pay for the cleaning of the stones of the Chapel."