The church was built on the ruins of the Temple of Juno Moneta, which stood on the Arx, one of the two hills of the Capitoline Hill.

The current building was erected in the 12th century, but a church was already present in the 9th century, built on the ruins of the temple dedicated to Juno Moneta. Legend has it that it was on these very slopes that the Tiburtine Sibyl predicted the coming of Christ to Emperor Augustus: "HAEC EST ARA FILII DEI," "Behold the altar of the Son of God!"—hence the name Ara Coeli, meaning "altar of heaven."

Consecrated in 1291, the 14th-century staircase was built as a tribute to the Virgin for having ended the Black Death and was inaugurated in 1348. In the Middle Ages, the church took on not only religious but also civil significance: here the councilors met to discuss the "Res Publica," and from here the leader and tribune Cola di Rienzo addressed the Roman people.

In the 9th century, the church became a Benedictine abbey and later passed into the hands of the Roman emperors. to the Franciscans, who gave it its Romanesque-Gothic appearance. During the occupation of Rome in 1797, the French took possession of the hill, expelling the Franciscan friars and reducing the church to a stable: much of the Cosmatesque decorations that embellished it were destroyed.

The name Ara Coeli, meaning "altar of heaven," comes from an ancient legend. The world is still pagan, Jesus is not yet born, but many mysterious signs herald his coming. It is Augustus himself, the most illustrious of the Roman emperors, who has a vision while he is near the temple on the highest point of the Capitoline Hill. The sky opens and a beautiful girl appears among the clouds, sitting on an altar with a child in her lap. "Behold the altar of the Son of God!" exclaims the Sibyl, and Augustus, it is said, falls to his knees.
To commemorate this miracle, the Franciscans in the 13th century built the church on the site of the Temple of Juno Moneta, where the miraculous event had occurred, calling it Santa Maria in Aracoeli.