The outpost was originally established as La Misión Santa Clara de Thamien (or Mission Santa Clara de Thamien, a reference to the Tamyen people) at the Indian village of So-co-is-u-ka (meaning "Laurelwood", located on the Guadalupe River) January 12, 1777. There the Franciscan brothers erected a cross and shelter for worship to bring Christianity to the Ohlone and Costanoan peoples. Floods, fires, and earthquakes damaged many of the early structures and forced relocation to higher ground. The second site is known as Mission Santa Clara de Asís. A subsequent site of the mission dating from 1784 to 1819 is located several hundred yards west of the De La Cruz overpass of the Caltrain track; moreover, several Native American burial sites have been discovered near this subsequent site. The current site, home to the first college in Alta California, dates back to 1828.
Initially, there was tension between the people of the mission and those in the nearby Pueblo de San Jose over disputed ownership rights of land and water. The tension was relieved when a road, the Alameda, was built by two hundred Indians to link the communities together. On Sundays, people from San Jose would come to the mission for services, until the building of St. Joseph's Church in 1803. In that year, the mission of Santa Clara reported an Indian population of 1,271. In the same tabular report, its resident priest estimated that 10,000 cattle, 9,500 sheep, 730 horses, 35 mules, and 55 swine were on mission lands, while about 3,000 fanegas of grain (some 220 pounds (100 kg) each of wheat, barley or corn) had been harvested.
After the Mexican secularization act of 1833 most of the mission's land and livestock was sold off by Mexico. Most of the buildings continued to be used as a parish church, unlike the other missions in California.
In 1850, California became a state, with that change priests of the Jesuit Order took over the Mission Santa Clara de Asís in 1851 from the Franciscans. Father John Nobili, S.J., was put in charge of the mission. He began a college on the mission site in 1851, which grew into Santa Clara University; it is the only mission to become part of a university, and it is also the oldest university in California. Throughout the history of the mission, the bells have rung faithfully every evening, a promise made to King Charles III of Spain when he sent the original bells to the mission in 1777. He asked that the bells be rung each evening at 8:30 in memory of those who had died, although the actual bells have since been replaced by a recording.
In 1861, a new wooden façade with two bell towers was attached over the old adobe front of the building. The interior was widened in 1885 to increase the seating capacity by removing the original adobe nave walls. A fire in 1925 destroyed the structure, including the surrounding wall. The church's parochial functions were transferred to the Saint Clare Parish west of the campus. A rebuilt and restored Mission Santa Clara was consecrated in 1929, when it assumed its primary modern function as chapel and centerpiece of the university campus. It is open to visitors every day; the mission museum is located in the university's De Saisset Museum.
The original mission cemetery, still used, is located on nearby Lincoln Street.