The idea for the chapel came from Johan Ögrim, commander of the Salvation Army, who put forward the proposal in 1919. Archbishop Nathan Söderblom supported the plan and helped ensure it was realised. The chapel was built to mark the centenary of the raising of the Ansgar monument and the 1100th anniversary of Ansgar's arrival at Birka, and it was consecrated in 1930.
The building was designed by the architect Lars Israel Wahlman, with the medieval parish churches of the region as his model. It is built of reddish-brown sandstone quarried from the nearby island of Midsommar, and its combined nave and chancel form an unusual plan said to resemble a church bell opening towards the west. Two projecting buttresses at the western end frame an open bell turret, and the deep apse in the east stands several steps above the nave floor, with a sacristy below.
Inside, the flat ceiling carries ornamental painting in white and gold, while the domed vault of the apse and the surrounding walls are covered with narrative scenes. Murals in the apse, depicting a vision associated with Ansgar, were painted by Olle Hjortzberg, and the paintings on either side, along with scenes from the Ansgar chronicle on the copper-clad interior and the chapel doors, are the work of Gunnar Torhamn.
Three large bronze sculptures by Carl Eldh stand in the chancel: one showing Ansgar blessing Birka, and two others representing figures connected with the mission there. The chapel also contains a font of whitened oak with a lockable lid, gilded wooden chandeliers designed by Wahlman himself, and a small mechanical organ with five stops, originally built in 1801 for a church in Dalarna and later installed here in 1930.
Funding for the building was raised partly through the sale of a specially produced illustrated Bible, each copy signed by Archbishop Söderblom, a fundraising device that reflects the chapel's origins as a project of both church and public devotion.