During the eighteenth century, church authorities in Jämtland and Härjedalen worked to bring Sami communities more fully into Swedish church life, establishing schools and appointing travelling catechists to teach reading and Christianity. Because Sami families moved to the mountains in summer, ordinary parish worship there was often impractical, and clergy instead held gatherings in the fells themselves, including at Handöl, where a request for a prayer house and burial ground was made in 1794.
The chapel was built in wood in 1799, brought into use in 1804 and formally consecrated in 1806. Local people funded and built the walls, floor and roof, while the mountain farming community and the Sami paid for and fitted out the interior, which included an altar and pulpit brought from Frösö church.
The building later fell into disrepair, and by the early 1860s it was unusable; services moved in part to nearby Vallbo kapell. The chapel stood in ruin for around thirty years before being sold by the Sami to the men of Handöl village. It was given a basic restoration in 1891, with further work in 1914 and 1946, when a porch and bell frame were rebuilt. A further renovation took place ahead of the chapel's bicentenary. The chapel is of timber construction with standing panel cladding and a shingled roof, set within a simple, naturalistic churchyard.
Several fittings recall the building's connection to Frösö church: a pulpit associated with the seventeenth-century carver Per Ifwarsson, somewhat reduced from its original four sides to three, and a late-medieval altar cabinet, damaged and partly overpainted, with traces of older imagery including a depiction of Saint Olaf with his axe and orb. The altar rail was assembled from parts of Frösö church's old pew furnishings, carved in a seventeenth-century style.
Smaller objects include two medieval wooden sculptures once hidden under later overpainting, a small carved dove above the pulpit recorded as already present when the chapel opened in 1804, an unfinished votive ship, and a spherical iron poor-box, possibly once used as a heated hand-warmer in the unheated building. A soapstone tablet kept in the chapel bears a brief and poignant inscription recalling the deaths of some 600 people connected with the Armfeldt army's disastrous 1719 mountain crossing, after the stone was found in a nearby field.