The General Board of Commissioners in Lunacy was set up in 1867 to deal with the problem of pauper lunatics, who were either housed in overcrowded poorhouses or locked up and ignored by relatives. Before 1872 lunatics in the Borders were treated at Milholme House in Musselburgh, but the 1857 Lunacy (Scotland) Act provided for a new asylum to be built at Melrose to treat patients from the counties of Roxburgh, Berwick and Selkirk. 124 patients were admitted when the new 200-bed asylum opened in May 1872, but overcrowding soon became a problem. This was partly relieved by accommodating some female patients in specially constructed houses near the main hospital, one of the many innovative methods of care employed at the asylum. From early on patients were discharged after a probationary period, and the second Medical Superintendent Dr J. Carlyle Johnstone introduced parole for patients and the removal of locks from some interior doors.

In 1899 a new female hospital was built which would later become Glentress and Traquair Wards, with new recreational and dining facilities and staff accommodation following soon after. A new male hospital opened in 1905, by which time it was necessary to build more new accommodation for females. By 1908 there were 440 beds available, and the Commissioner in Lunacy from Edinburgh commented that 'the general health of the patients seemed to be good'.

In 1931 as a result of the Local Government (Scotland) Act of 1929 the Roxburgh District Board of Control was disbanded, and Roxburgh, Berwick and Selkirk County Councils took over the management of the asylum under the Roxburgh District Mental Hospital Joint Committee. With the creation of the National Health Service in 1948 the hospital came under the South Eastern Regional Hospital Board and was managed by Dingleton Mental Hospital Board of Management; at this point the name of Dingleton Hospital came to be commonly used. At this time the then Medical Superintendent Dr George MacDonald Bell introduced his 'open door'policy of removing locks from all ward doors to give patients the feeling of increased freedom. He also believed that the surrounding community should be involved as much as possible in the life of the hospital. In the following decades social psychiatry, work therapy and community psychiatry developed more and more. After NHS reorganisation in 1974 Dingleton became part of Borders Health Board. The hospital closed in 2001.