The chapel was designed in medieval-inspired neo-Gothic style, built of red brick and granite, and was completed in 1872. Rather than serving only as a place of worship, the building combined several functions: a chapel hall, a schoolroom for local children upstairs, clergy and teacher housing, and in the basement a school kitchen said to have provided one of the earliest organised school meal services in the country. This mixture of sacred and secular purpose reflects the philanthropic and educational ambitions common among landowners of the late nineteenth century, and the exterior, with its half-timbered sections, exposed granite walling and slate roofing, shows the influence of English Arts and Crafts ideas on Swedish neo-Gothic building.
The wider estate once included a barn, dairy, brewhouse, woodshed and bathhouse, though only the dairy building survives; it suffered a fire (sources differ on whether this was in 1939 or 1968) and has since been restored. It now houses a small museum devoted to the sculptor Eric Rafael-Rådberg, along with items connected to the now-vanished Gustavsvik manor house.
Rafael-Rådberg owned the chapel and dairy from 1922 until his death, using the dairy as his studio and converting the chapel itself into a family home. After his estate was settled, the newly formed Österviks kapellstiftelse (Chapel Foundation), established in the early 1960s, acquired the buildings and undertook restoration, saving them from decline with the help of a national fundraising campaign. The chapel was returned to religious and community use in the later 1960s, though sources give differing years for the re-consecration.
Today the chapel and its surrounding park and garden are protected as a listed heritage site (byggnadsminne). The chapel is not part of the Church of Sweden itself but is maintained by an independent non-profit association, with running costs met through donations, membership fees, event income and support from the Kristinehamn pastorate. The site continues to be used for occasions such as christenings, weddings and concerts, as well as functioning as a small museum of local history and craftsmanship.