Most spa towns throughout the United Kingdom are based on naturally occurring springs filled with mineral-laden waters. However, the waters at Woodhall Spa were discovered by accident. During the early 19th century, a shaft was created in search of coal when an underground saltwater aquifer was unearthed.

In 1834, the Lord of the Manor Thomas Hotchkin had the water analyzed and discovered it was rich in both iodine and bromine. He constructed a new well at a cost of £30,000 and established the spa baths on the grounds of the Victoria Hotel. This association with the Victoria ended in the 1920s when the hotel was destroyed by fire.

The water was originally raised using a hand-wound windlass, which was replaced in 1880 with a steam winding engine that raised water by the barrel. Around 1960, electric pumps were installed. The former steam winding engine is currently on display at the Museum of Lincolnshire Life.

The creation of the spa baths was key to the development of the town and its economy. This increased when a railway station was established to serve the town in 1848. At one time, horse-drawn bath chairs were used to transport clients between the baths, local hotels, and the railway station.

Although public baths became increasingly unfashionable during the 20th century, the spa and its hydrotherapy treatments remained in operation. They were even utilized by the British National Health Service. This all came to an end in 1983 when the well shaft collapsed. This also caused the boiler chimney and portions of the building to fall down the shaft. A large amount of limestone was used to fill the shaft to make it safe.

The building has remained in a state of gradual decay since the collapse. There are plans to reestablish the baths in the future.