A church is thought to have stood in Nye since medieval times. One disputed local tradition holds that the parish's first church was actually sited at Mörsebo, recorded in 1290 as Myrisboda, before being moved to the current location, though this remains uncertain. The stone nave is generally believed to date from the later 13th century, with an architectural style said to reflect the influence of the Cistercian monastery at Nydala.
The sacristy was probably added in the 15th century. For much of its early life the church had no tower, its bells instead housed in a separate wooden bell frame, a common arrangement for medieval churches in Småland. The building was damaged by fire towards the end of the 1400s and underwent thorough repair during the following century.
A tower was built to the west in 1767–1768, replacing the old bell frame, and in the early 1830s the church was extended with a rounded chancel apse. The most extensive change came with a major renovation in 1890, which gave the tower its present form, distinguished by a spire said to be characteristic of the Njudung district, and also transformed the interior: the enclosed box pews of the 17th century were replaced with open pew seating typical of the period.
Among the furnishings, the altarpiece depicting Christ's body taken down from the cross was painted in 1816 by Frans Roselli, itself a copy of a work by Professor Gustaf Sandberg in nearby Stenberga church. The font dates from 1938, and the pulpit, with its half-round body reached from the sacristy, reflects typical 19th-century design. Two brass chandeliers, one from 1641 and a larger one from 1742, remain in use, along with a small Passion painting attributed to local organ builder Johannes Magnusson of Nässja.
The church organ has a similarly layered history: an instrument built in 1836 by August Rosenborg was later rebuilt and restored several times during the 20th century by workshops including that of Nils-Olof Berg, based in Nye itself.