In 1956 the then Salisbury District Council and the South Australian Housing Trust (SAHT) entered into an agreement with the State Government to build the hospital. The first meeting of the new Board of Management was held in November 1958 and chaired by Mr Victor Barrell the then Assistant General Manager of the SAHT, other SAHT officers, Salisbury Council members and local professionals.
The hospital was named after the Honourable Sir Lyell McEwin KBE, who was the Chief Secretary and Minister of Health in Sir Thomas Playford's Government.
Sir Lyell McEwin officially opened the hospital on 22 April 1959. It had 45 beds of which 18 were obstetric beds and 27 general and surgical beds and was granted approval by the Nurses Board of South Australia to train nursing students for the first two years of their course. In 1965 the hospital became a full-time nurse training school.
In 1966 the hospital was extended to 153 beds. In April 1972 domiciliary care services commenced with the appointment of a Social Worker.
The hospital was proclaimed a public hospital in 1973.
In 1997 the Lyell McEwin Hospital and The Queen Elizabeth Hospital amalgamated to form the North Western Adelaide Health Service(NWAHS) and a joint management structure was created with many shared services. In 2001 separate management structures were re-introduced, but a shared Board of Directors remained in place, and some services are still shared.
On 1 July 2004, the hospital officially incorporated into the Central Northern Adelaide Health Service