The synagogue was established by Sephardic immigrants from Greece who arrived in Tzfat during the sixteenth century. the synagogue was built in the place where Rabbi Isaac Luria (The Ari ) used to pray on the eve of Shabbat. Before the Shabbat evening prayer, he was accustomed to walk with his disciples to a nearby field to welcome the Shabbat, dressed in white robes. The Ari’s tradition of welcoming the Shabbat is echoed in the 'Kabbalat Shabbat' service of Jewish communities around the world. The service is reaching it's spiritual peak during the singing of the song 'Lecha Dodi', when worshippers turn toward the west of the synagogue to "greet" the Shabbat.
In the eighteenth century, with the arrival of the Hassidim from Eastern Europe, the synagogue came to serve the Ashkenazi (eastern European) community. The synagogue was destroyed in the earthquake of 1837, and was rebuilt 20 years later. During the 1948 War, a bomb is said to have fallen in the outside courtyard. Shrapnel flew into the synagogue while it was packed with people in the middle of their prayer, yet miraculously no one was hurt. This event was considered one of many miracles said that took place in Tzfat. Though the synagogue is associated by name with the Ashkenazi community, today it serves as a place of worship for all Jews and remains popular among worshippers of different affiliations.
The Holy Ark was carved from olive wood by a craftsman from Galicia, in the style of the synagogues of Eastern Europe. It includes an anthropomorphic image of a lion, alluding to Rabbi Luria's acronym Ari, which means lion.