The General Dispensary for the Children of Salford and Manchester was founded in 1829 as a voluntary dispensary in Back King Street, Manchester. At the time, children were excluded from hospitals as in-patients, although they were allowed to attend dispensaries. Childhood mortality was unacceptably high in the increasingly industrialised and overcrowded areas of Manchester and Salford. The bulk of the original subscribers were merchants and manufacturers, motivated partially by philanthropy but also by the need for a healthy adult work force. The original staff consisted of the physician Dr Alexander, who stayed until 1854, a surgeon Walton Barton Stott (1800-1878) and an apothecary Mr Hollowell. By 1850 the Dispensary had moved to Cross Street, where it was treating approximately fifteen hundred children each year. The Dispensary moved again in 1854 to St Mary's Parade, where it was known as the General Hospital and Dispensary for Children. Around this time, Dr Louis Borchardt was appointed. He was a specialist in children's diseases in exile from Berlin. Borchardt was keen to build up a body of expert knowledge on the diseases of children, and he resisted attempts to amalgamate with maternity hospitals like St Mary's. Borchardt persuaded the governors to offer, as a trial, six beds for in-patients. These beds were opened in 1855 and were a great success; by 1858 it was agreed to expand to twenty five beds. Fifty four in-patients were treated, and the number of patients treated in the Dispensary rose dramatically. In 1859, the Dispensary moved to Bridge Street.
In 1867 the decision was made to build a much larger hospital for in-patients in the outskirts of Manchester, and a new dispensary in the city centre. Gartside Street Dispensary was opened in 1868, and served thousands of out-patients. A new Godfrey Ermen Memorial Dispensary was built on the Gartside Street site in 1907. The dispensary later became the Out-patients Department of the Royal Manchester Children's Hospital and played an important role in developments of the Children's Hospital and in local health education. The Gartside Street site closed in 1991 when the Department moved to Pendlebury. The Pendlebury site was purchased in 1871 and the hospital was to be based on the new pavilion system. The new hospital was called the Manchester Children's Hospital, becoming the Royal Manchester Children's Hospital in 1923, though often referred to as Pendlebury. The proposed building was identical in design to the new St Thomas's Hospital in London with six pavilion wards and space for 160 beds. The first phase of three pavilions was opened in 1873, had a telephone link to the Gartside Street Dispensary. Further money was needed to complete the second phase. A bazaar was held in the Free Trade Hall in 1875 and raised the incredible sum of £24,000, illustrating the rise of philanthropy for children in the Victorian period. The second phase was completed and opened in 1878. The new hospital was concerned not just with treating the children who came under its care, but also in the development of knowledge and expertise regarding the diseases of children generally, rapidly acquiring a national reputation. Dr Borchardt retired in 1879; Henry Ashby, who was appointed as visiting physician, continued to strengthen the reputation of the hospital. By 1890, the Hospital had a reputation for the training of nurses. Nurses came from all over England and in 1922 it was appointed a registered training centre.
In the early years, parents were reluctant to admit children to hospitals, which were strongly associated with infectious disease. It gradually became acceptable among middle classes to admit their children to hospital and the work of the hospital subtly changed. In 1897 the fever ward was closed, fever cases were to be admitted to Monsall Hospital in North Manchester. St Anne's Convalescent Home was built in 1897 at the sole expense of Sir William Agnew. It received about 250 children a year from around the North West. The home continued to benefit local children until 1972. The 1920s and 1930s, as in many other hospitals, saw an increase in specialist units, with the new ENT Department, Speech Clinic and Psychological Clinic. The out-patient clinic which treated children with mental and speech disorders by non-medical teachers with special qualifications was one the first of its kind in the country, and was very successful. The hospital also housed the Department of Child Health of the University of Manchester. In 1948, the Children's Hospital came under the Salford Hospital Management Committee of the Manchester Regional Hospital Board. In 1995, the Manchester Children's Hospitals Trust was formed with Booth Hall Hospital. The Manchester Children's Dispensary and later Hospital were the first continuous medical service for children in Britain, and the Hospital was also the first paediatric teaching hospital.