Unlike most state hospitals created in the United States, Middletown State Hospital was founded in 1870 for "the care and treatment of the insane and the inebriate upon the principles of medicine known as homœopathic." Homeopathy is an alternative system of medical treatment based on the claim that a substance that causes the symptoms of a disease in a healthy person would cure similar symptoms in a sick person, often utilizing natural treatments and remedies (it has since been dismissed as pseudoscience). The movement was popular during this time, and the Friends of Homeopathy negotiated with New York State to build an institution where family and friends could receive homeopathic treatment instead of allopathic medical care (using traditional drugs and surgery). The Middletown State Homeopathic Asylum was completed in 1874 and operated like other institutions in the state, though with a special clause that deemed all treatment was wholly of the homeopathic order. Sixty-nine paying patients were admitted upon its opening.
Homeopathic treatment at Middletown consisted of many recreational activities, such as arts and crafts, baseball, and art exhibitions, followed by a strict dietary regimen. These homeopathic methods were also taken to the Westborough Insane Hospital in 1886, when a Middletown asylum doctor was appointed as superintendent there. The Middletown hospital's baseball team, consisting of patients and drafted semi-pro players, proved to be quite exceptional and were called "The Asylums." By 1890, they were playing against regional baseball teams and winning most of them, and some patients went on to play on professional teams after their release from the hospital. In 1890, the State Care Act made it no longer possible to give private care to individual patients, and the hospital was taken over by the State Lunacy Commission.
By the early 1900s, the hospital grew to over 100 buildings and 2,000 patients. In 1901 Ralph Albert Blakelock, a notable romanticist painter, was committed to the hospital and attempted to explain his disposition to the staff. His claims of notoriety and pieces hanging in galleries were dismissed as evidence of his insanity, however one of his pieces sold for $20,000 in 1919, which was the most money ever made by a living American artist at the time. A newspaper reporter investigated the artist and found Blakelock at Middletown, where he was subsequently released to a caregiver, Sadie Filbert, aka Beatrice Van Rensselaer. She proceeded to steal all of Blakelock's money and he died only three years later.
The peak population at Middletown State Hospital reached over 3,600 in the 1960s, but de-institutionalization legislation emptied the institution in the years after. Much of the old grandiose complex was razed as the hospital downsized, however a small portion an original pavilion was left abandoned for decades; this relic was unfortunately burned and bulldozed in July of 2015. The rest of the campus remains abandoned since 2006, when the hospital officially closed.