Lyse was founded in 1146, as a subsidiary to Fountains Abbey in Yorkshire in England. Bishop Sigurd of Bergen headed this effort and provided means to the monastery. There was close contact with the parent monastery in the initial period, and up to 1200 there were probably English abbots at Lyse. During the late Middle Ages the monastery came under Sorø monastery in Denmark, it had formerly been under Alvastra in Sweden for one year. Lyse – one of the richest in the country – was closed down between 1537 and 1541 and was put under the crown.
The buildings were constructed partly in steatite from a quarry northeast of the monastery site, in the Lyse valley. When the monastery was pulled down, steatite was transported from Lyse to the construction of the Rosenkrantz tower in Bergen and Kronberg castle in Denmark.