Traditionally founded by the monk Gyoki during the Tenpyo era (729-749) as a Hosso-sect temple.

On June 24, 1441, the sixth Muromachi shogun Ashikaga Yoshinori was assassinated at a banquet at the Kyoto residence of Akamatsu Mitsusuke, governor of Harima Province (the Kakitsu Incident). The Akamatsu forces carried the shogun's head on a spear as they retreated to their home province, and are said to have abandoned it here at Sozenji. Known to contemporaries as the 'Terror Shogun' and 'Evil Palace' for his ruthless rule, Yoshinori's violent end prompted the new shogun Yoshikatsu to order senior vassal Hosokawa Mochikata to rebuild this temple as his memorial. The 'head-mound of Yoshinori' on the precinct is one of the very few surviving shogunal head-tombs in Japan and has become a pilgrimage site for history enthusiasts.

In July 1600, ahead of the decisive Battle of Sekigahara, Ishida Mitsunari sent troops to the Hosokawa residence in Osaka to seize the wives and children of the Tokugawa-aligned daimyo as hostages. Hosokawa Gracia (Tama, daughter of Akechi Mitsuhide) — wife of Hosokawa Tadaoki — refused to be taken in her husband's absence and had the chief retainer Ogasawara Shosai strike her down before the mansion was set afire. As a Christian forbidden from suicide, hers was a death negotiated through her retainer's sword. The missionary Organtino is said to have recovered what were believed to be her bones from the burnt ruins and interred them here. The temple became the Hosokawa family temple, and Gracia's grave still stands in the precinct as a pilgrimage site of Japanese Christian history.