Named by the Sydney Cove Authority in the 1970s due to the close proximity of the site of Sydney's first hospital, which operated from 1788 to 1816. On some early maps, it is marked as Cambridge Street.
The colony's first hospital was constructed here in 1788 and included a herb garden to help assist in treatment due to a shortage of drugs.
The second hospital was a portable hospital which arrived with the Second Fleet in June, 1790. The portable hospital was constructed in less than a fortnight and was soon filled with over 400 patients. Nurses were selected from convicts to work in the first roughly constructed hospitals.