In 1896, Palama Chapel was built as an outreach ministry of Central Union Church. In 1900, a public health crisis emerged with reported cases of the Bubonic Plague in Honolulu’s Chinatown district. By order of the Honolulu Board of Health, fires were set in Chinatown that accidentally spread into adjacent neighborhoods and destroyed houses, leaving thousands of residents homeless. Palama Chapel became surrounded by crowded tenement housing for the displaced residents, many from Native Hawaiian, Chinese and Japanese populations. The resulting urban problems of sanitation and health care, as well as the rise of education and recreation needs inspired Palama Chapel to transition in 1906 into Palama Settlement, a social service agency. Incorporated in 1910, Palama Settlement strived to improve living conditions by offering public health services and social, educational, and recreational activities under the framework of the settlement movement in the United States during the Progressive Era of late 19th century and early 20th century industrialization.

In 1925, Palama Settlement moved from its old location on the corner of Liliha and King Streets to its present location on Vineyard Boulevard. Medical services increased by 57 percent. Recreation programs grew even more popular, often headlining the sports pages of the Honolulu daily newspapers. Tennis courts and high dive platforms for the outdoor swimming pool were built. A public library was built along with an auditorium, which was also used for moving picture shows, live concerts, theatrical performances, and lectures. Camping was popular at Palama-by-the-Sea, the campsite in Waialua.

The global economic ramifications from the Great Depression in 1929 did not slow down the activities at Palama Settlement. The call for public health and social services resounded across the islands when the heads of households experienced unemployment. Social work became just as important as medical work for the individuals and families who sought treatment at the clinics. The social workers counseled and guided patients in financial need. By 1939, Palama Settlement tripled its services to the community since 1925. Recreational activities were offered to the older population, and training grounds were provided for athletes to practice boxing, martial arts, tumbling, weightlifting, and wrestling. The youth participants came to Palama Settlement right after school from the Downtown Honolulu, Kapālama, and Kalihi districts.

After World War II, Palama Settlement jump-started the neighborhood programs with year-round activities, including the inauguration of the music school in 1946. Palama Settlement in 1947 closed the medical clinics. Community relationships were fortified through the cooperation of the Kalihi-Pālama Community Council. Palama Settlement’s Group Work department actively encouraged club and recreation activities with extended hours into the evening for greater participation.

In the 1960s, Palama Settlement conducted studies that would service the influx of immigrants who resided in the newly built public housing complexes in the Kalihi and Pālama neighborhoods. Innovative programs were designed for community outreach and development that focused on providing a safe and nurturing environment for youth and their families through the active participation of athletics, educational and cultural classes, and social events that continued through 1980.