The synagogue was built between 1355 and 1357, according to the inscriptions on the building itself. It was built by order of Samuel ha-Levi, a member of the Jewish community who, among other posts, was a councillor and almojarife of the Kingdom of Castile during the reign of Pedro I of Castile. The construction was carried out despite the existence of a prohibition on the erection of synagogues, a fact that appears in Alfonso X's Las Siete Partidas, but a provision was included allowing the Crown to make exceptions to this rule. This was the case of the Synagogue of El Tránsito, whose construction was permitted by Pedro I as thanks for the support and loyalty of the Jews of the city of Toledo to the monarch in his struggle for the recovery of the city after it had passed under the control of Enrique de Trastámara.

At this time the aljama of Toledo became the richest and most influential in Castile and some Jews, as in the Arab period, held important positions at the Court. Castile, and the city of Toledo as its greatest exponent, had one dominant religion and two accepted minorities (Mudejar and Jewish) as long as they did not interfere with Christianity. Furthermore, the conversion of minority religions to Christianity was facilitated, while the opposite was punished. The Jewish community was present in Toledo from Roman and Visigothic times. In the Arab period it was located in Madinat al-Jahud, in the southwestern part of the city, and had a semi-independent character within the city itself. The aljama of the city of Toledo had its own organisation and three fundamental areas: fiscal, jurisdictional and religious. Although they were servants of the king, they possessed privileges, and the rabbis had broad authority over aspects of private and ritual law.

The synagogue was the fundamental Jewish institution in the main urban centres of Castile after its conquest from the Muslims. In the municipal charters, they were understood as the "place where Jews could meet to take their oaths", in addition to settling disputes and lawsuits. This interpretation referred to the presence of a communal synagogue, but this did not preclude the existence of smaller prayer houses for private use, often established by wealthier families.

Through a series of excavations carried out in the early 2000s, it was determined that under the foundations of the synagogue there would have been a bath complex, called the Hamman of Zeit, which was destroyed for the construction of the synagogue between 1357 and 1363. In addition to the site of the bathing area, the nearby houses were demolished and the synagogue was built on this site, the author of which is unknown, thanks to the patronage of Samuel ha-Levi. The Mikveh was built next to the synagogue, possibly also financed by Samuel ha-Levi.

After the expulsion of the Jews in 1492, the Jewish quarter was occupied by the nobility and the area of the synagogue was granted by the Catholic Monarchs to the Order of Calatrava, who placed the priory of San Benito there and converted it into a private church of the Order, building an archive on the north side for the military Orders of Calatrava and Alcántara.

In the 17th century, the church of San Benito became popularly known as "del Tránsito" due to the commission that a Calatravan knight commissioned a painting of the Transitus of Our Lady from the painter Juan Correa de Vivar of the Toledo school, who adorned the Plateresque altar from that time onwards.

Until the 19th century the church continued to belong to the military orders, appearing in the documentation as the "hermitage of San Benito", outside the city walls, very abandoned and in continuous deterioration. The confiscation of 1835 hardly affected the building but did affect the movable property and in 1877 the king, in accordance with the Royal Academy of Fine Arts of San Fernando and at the proposal of the General Directorate of Public Instruction, declared the chapel of El Tránsito a National Monument.

Subsequently, in 1964, it was decided that the Samuel ha-Levi Synagogue would be the headquarters of the Sephardic Museum, whose aim was to conserve the legacy of Spanish-Jewish and Sephardic culture so that it would be integrated as an essential part of the Spanish Historical Heritage, a task that it has carried out to the present day.