The name Urshult is thought to combine two old words meaning "aurochs" and "woodland grove", the aurochs being a large wild ox that died out in Sweden by the seventeenth century. In the early medieval period the parish was known as Hwaem, later Hwaembo, a name still echoed in nearby Vemboö, some six kilometres from the present church. Tradition holds that the parish's first church stood near Vemboö, possibly close to a residence of the Bishop of Växjö, though this account is late and uncertain. A stone archway and altar were erected in 1959 on the site where that first church is believed to have stood.
By the fourteenth century the church site had moved to its current location, where a wooden church was built. In 1794 Bishop Olof Wallquist visited the parish and condemned this building as too small and poorly maintained. Planning for a replacement began, and building work finally started in 1808 to a design by Daniel Forsman of the Överintendentsämbetet in Stockholm, developed with the parish's own vicar, Carl Stenstrand. The ambitious new church was intended to seat over 1,600 worshippers, making it one of the largest rural churches in the diocese. The first service was held in 1810, and the church was formally consecrated on 4 October 1812 by Bishop Ludvig Mörner.
The building is a neoclassical hall church with a tower topped by a lantern. Above the entrance, a stone tablet carries a quotation from the Book of Nehemiah referring to builders working with swords at their sides, a reminder that Sweden was still at war with Russia when the church was built. Unusually, the chancel lies to the west rather than the traditional east, a result of the site's position relative to the road and churchyard.//The exterior is roughcast and limewashed, with a copper roof dating from 1948.
Few furnishings survive from the demolished medieval wooden church, but a glass chandelier and a red chasuble, both from earlier centuries, remain in use, along with three paintings from the old gallery front. A medieval image of the Virgin Mary, returned to the church in 1954, is now displayed near the font.
The most striking feature of the interior is the extensive decorative scheme painted in 1890–91 by the Småland church painter Ludvig Frid. His chancel paintings depict the Nativity, the Crucifixion and the Ascension, flanked by figures symbolising the Word and the Sacraments. The long walls carry painted friezes showing Christ's entry into Jerusalem and his walk to Golgotha, copied under Frid's direction from Bertel Thorvaldsen's marble frieze in Our Lady's Church in Copenhagen. The gallery front was decorated in 1891 by Mattias Hörberg, reflecting local Blekinge folk-painting traditions.
The church's organ has been rebuilt more than once; the current mechanical instrument was built in 1962 by Hammarbergs Orgelbyggeri of Gothenburg, retaining an organ case from 1825 designed by the architect Carl Gustaf Blom Carlsson. The building underwent substantial restoration in 1976–77, and an exterior renovation in 2016–18 saw the walls replastered, the cross regilded, and the original windows restored to their historic red colour.