The present chapel dates from 1907–1909, commissioned by the forestry company Skönviks AB (a forerunner of today's SCA) to serve the sawmill settlement at Ljungå. It replaced an earlier chapel, built around 1865 for the sawmill workers, which burned down along with its bell tower in 1898. A burial ground had been established on the site not long after that first chapel was built, and it continues to serve the community today.
The building was designed by architect Rudolf Arborelius in the National Romantic style then fashionable for Swedish timber churches. Arborelius trained partly under Isak Gustaf Clason, who separately designed grand residences for the sawmill company's director, Fredrik Bünsow; it is possible this connection helped bring Arborelius the commission. The work itself was overseen locally by master builder Jöns Jönsson, from nearby Österdöviken.
Ljungå kapell is notable as one of only two surviving 'bruks' or works chapels in the county, the other being Ljusnedals kyrka in Härjedalen — both reminders of an era when industrial companies built churches for their workforce alongside sawmills, mines and ironworks. Such chapels reflected the close relationship between the Church of Sweden and industrial employers of the time, who saw them as valuable amenities strengthening community life, while also giving workers and their families a nearby place for worship, ceremonies and burial without long journeys to the parish church.