Ridgley Institution, a state run hospital for "mentally defectives," was opened in 1934. Construction was not fully complete until 1936, although the first patients arrived in July of 1934 and the institution was usually at or close to its capacity of 400 patients. Throughout its years Ridgley Institution housed more residents than any other mental hospital in the state. The original building included a school and a large grounds area on which farm work was carried out by patients under heavy supervision.

Those who were committed to Ridgley were to stay there for the rest of their lives, although some were transferred to the state insane asylum. After the 1984 fire, a new facility was built on the adjacent property. On the building that burnt, a cornerstone still reads "A.D. 1936, To attain a state of grace, the mind must live a life of virtue."