Bishop Sven of Børglum founded the priory in 1370, just outside the town of Nykøbing on Mors, and dedicated it to St John the Baptist and Mary Magdalene. The land had come to the diocese before that from a Lady Mette Pedersdatter. In 1380 the Hospitallers were granted the rights to St Clement's Church in Nykøbing, and from then on the order's fortunes and the town's were tangled together, not always comfortably. The foundation grant itself survives in the letter books, which is rarer than it sounds. When the monasteries were dissolved in the 1520s and 1530s, founding charters were among the first documents the crown confiscated, and most simply vanished.

At its height in the early sixteenth century Dueholm held twelve brother priests under a prior, who was frequently a secular nobleman acting as the house's advocate in worldly affairs. Alongside them worked lay brothers - not monks, but men living a religious life bound up with the running of the hospital. The letter books reveal a population in constant motion. Noble families parked younger sons at Dueholm for a few years, and on reaching their majority those young men chose: leave to marry, leave for war, stay on with the lay brothers, or apply to become knight-monks and enter the priesthood. The house also oversaw St Jørgen's leper hospital outside town, a separate institution with its own lay brothers trained in the care of people with leprosy, where the knight-priests took turns saying daily mass. There was a school too, standing between the mill and the town.

The townspeople of Nykøbing built their own hospital for the poor and sick, staffed by lay brothers of the Order of the Holy Ghost. The Hospitallers wanted it. In 1445 King Christopher of Bavaria confirmed the town's rights to the property its citizens had paid for, but the priory had already secured a papal bull permitting it to finish the Holy Ghost Chapel there, and the argument turned, as such arguments do, on who received the donations. Bishop Gert backed Dueholm hard, forbidding laymen and helpers from benefiting from gifts to the hospital. It grew heated enough that Christian I intervened, ruling that the parish priest of St Clement's could not be barred from saying mass in the hospital chapel. Since the priory chose that priest, the ruling handed it spiritual control, and the Hospitallers took the hospital over. The grievance did not die. In 1528 the town wrote to the reform-minded Frederick I about the pope's unlawful gift, accusing the order of neglecting the very poor and sick it had fought to serve.

The older letter book was copied before 1527 and covers letters from 1371 to 1539; the younger was copied in 1527 and includes a register of arrivals at the priory and the places they came from. An inventory made in 1591 lists what still survived in the archive then, along with a separate inventory of Trinity Chapel's papers. The two volumes passed into the hands of Elle Krastrup, widow of Thygge Sandberg of Kvelstrup, who kept them safe, and after 1587 they went to the local magistrate. In the eighteenth century they were copied again and circulated among government officials, valued not as history but as evidence of who owned what. Together they are published as Dueholms Diplomatarium, and they remain an unusually intimate record of a medieval Danish house.

The Reformation reached northern Jutland slowly, but in 1536 Dueholm and its income properties reverted to the crown. The dissolution here was quiet rather than violent, because the brothers' main work was running the town's hospitals and the citizens had every reason to want that work continued. The priory was simply secularised. When the last secular prior, Jakob Jensen, died in 1556, the house was disbanded and the hospitals carried on. The buildings became a manor for the royal administrator once Thisted county was organised, the estate was broken into smaller holdings over time, and by 1901 only the west range remained, some of its Gothic arched windows still intact. That range - the old residence, built around 1450 - was restored and now houses Museum Mors, the island's museum of local history. Fragments of the other walls and foundations are still there, absorbed into later buildings, holding up somebody's garden wall.