As early as 1888 concerned parishioners had discussed the problem of burial space in the churchyard at St. Nicholas Church. In 1895, when there was no further burial space, the Parish Council purchased land on Budbury Hill from the Loseley Estate for a new cemetery. Later in the same year Mr. and Mrs. G F Watts offered to design and build, at their own expense, a Chapel in keeping with the site. Over seventy villagers, friends, craftsmen and craftswomen worked on the terracotta decoration. The builders were Heal & Jackson who also made alterations to the Watts’ home, Limnerlease as well as erecting Watts Gallery.The Jacksons were a well-known local family whose descendants still live in the area.
The exterior of the Chapel was completed in 1898 and dedicated by the Archbishop of Canterbury. The Chapel was consecrated by the Bishop of Winchester on 1st July 1898. In 1897 the Parish Council approved the Watts-designed plan for the Lych Gate.
In 1901 the decorations for the Chapel interior were begun under Mrs. Watts’ guidance in the Studio at Limnerlease. Mary and her assistants modelled and painted the stunning interior, its patterns modelled in gesso – felt dipped in a mixture of plaster and glue – finally completing it in 1904.
In 1906 permission was given to Mrs. Watts to erect a wellhead of her design (again at her own cost) over the well which she had been given permission to sink in 1896 and which was used in the building of the Chapel. The Cloisters were another of Mary Watts’ designs, completed in 1907.