The original Grenada Hospital was founded in October 1923, in the old Broadstreet home on College Street by Dr. F.S. Hill and Dr. J.K. Avent. Property on Mound Street was later acquired and, in February 1927, Grenada Hospital moved to that location with a new brick building with a capacity of 50 beds. This hospital was enlarged in 1946, 1957, and 1962, and had an ultimate capacity of 75 beds. In 1966, the hospital was reduced to 47 beds and was listed as an all private room hospital.
The Grenada Hospital was purchased in January 1965, by Grenada County and operated on Mound Street as Grenada County Hospital until November 15, 1967. The new Grenada County Hospital, in its present location, was opened November 15, 1967, with a capacity of 96 beds.On May 12, 1969, the hospital's Holmes Junior College sponsored Licensed Practical Nurse School was started.
The Grenada County Ambulance Service became a part of the hospital on April 1, 1977. It was then necessary to enlarge the emergency room area to include an emergency waiting room and space to accommodate the emergency medical technicians.
Ground was broken in 2007 for a $22 million expansion and on April 14, 2009, a grand opening ceremony was held to celebrate the completed expansion. Expansion and renovations included the following:
On January 1, 2014, University of Mississippi Medical Center assumed the operation of the 156 bed Grenada Lake Medical Center through the execution of a 20 year lease with three 10-year renewal options.