The hospital opened in 1902 as a 64 bed workhouse for poor sick people. By 1911 there were 520 beds. During the First World War, the facilities were used as an army hospital. The facilities reverted to a workhouse in the early 1920s and were then greatly extended to accommodate all the sick. In 1924, the Southmead Infirmary was built and was later renamed Southmead Hospital. Notable former medical staff include Geoffrey Tovey, serologist and founder of the UK Transplant Service, which was formed in 1972 and was initially based at the hospital.
In 2005, a major expansion was planned which included moving most services from Frenchay Hospital to the Southmead site, with Frenchay being downgraded to a Community Hospital. Full approval for the project was given by the NHS South West board in January 2009. A new building, which was designed by the Building Design Partnership and built by Carillion at a cost of £430 million, was procured under a Private Finance Initiative contract in 2010. The scheme brought all departments and services together under one roof. Called the Brunel building, after Bristol engineer Isambard Kingdom Brunel, it would have 800 beds, 24 theatres, patient gardens, a public square, a helipad and visitors' multi-storey car park.
The accident and emergency department at Frenchay closed on 19 May 2014 and reopened at Southmead the next day.
In early 2014, the second phase of the hospital redevelopment began with the demolition of the old main building to enable construction work to begin on a Brunel Building extension, together with enlarging the area in front of the hospital. The extension includes a new multi-storey car park for patients and visitors, a cycle centre with storage for 300 bikes, more shops, changing and shower facilities for staff and a community arts space.
Following the 2014 opening of the Brunel building, there was a shortage of parking spaces owing to high demands from visitors, patients, and staff. In 2014 and 2015, patients and visitors parked at the nearby Beaufort Way multi-storey car park. Improvements were made in 2016, including the construction of a 400-space multi-storey car park next to the Brunel building.