The "Chaiey Olam" Yeshiva was established on July 4th, 1886, in the Old City of Jerusalem by several Hasidic rabbis, Rabbi Yitzhak David Biderman, son of Rabbi Moshe from Leelov, and his nephew, Rabbi David Biderman, the Admor from Leelov, with the support of Rabbi Yehoshua of Kutna and his son-in-law Rabbi Chaim Elazar Wachs. The yeshiva served as the Hasidic counterpart in Jerusalem to the Etz Chaim Yeshiva, founded 45 years earlier by Rabbi Shmuel Salant.
The first head of the yeshiva was Rabbi Binyamin Yehuda Leib Bernshtein, son-in-law of Rabbi Yitzhak David Biderman. The yeshiva was initially founded in the Old City and moved from building to building before purchasing a building on Ma'aleh Chaladya Street in the Muslim Quarter, opposite the Cotton Market.
After a series of events, including the 1927 earthquake that severely damaged the building, and the 1929 riots, a new location was purchased on the outskirts of the Ahava neighbourhood ("today's Shabbat Square") in 1933. Over time, the yeshiva closed, leaving only a kollel and a Talmud Torah, which mainly served the old Jewish community connected to the Haredi community. The yeshiva building now houses the synagogues of Radzin and Eshel Hasidim, the Minzberg and Lamberger families, and a banquet hall.