In 1911, worn out by JPS and FAZ obligations and her enduring heartbreak over Louis Ginzberg, Szold's health finally broke down, resulting in surgery. She emerged, after a six-month convalescence, seemingly freed from the burdens of the past and ready to create something of her own.

Convinced of American Jewish women's potential to help create a Jewish homeland, Szold turned to New York's Zionist women's study groups. On the holiday of Purim, February 24, 1912, thirty-eight women gathered at Temple Emanu-El to create "a large organization of women Zionists" devoted to "the promotion of Jewish institutions and enterprises in Palestine, and the fostering of Jewish ideals." Szold was elected president.

The specific mission for "Daughters of Zion" and its New York "Hadassah" chapter crystallized when philanthropist Nathan Straus offered partial funding to establish district nursing in Palestine. On New Year's Day 1913, Szold presented the Hadassah Board with the challenge of raising $2500 and finding a skilled nurse able to depart for Palestine within a few weeks. Ultimately two nurses -- Rose Kaplan and Rachel Landy -- sailed with the Strausses on January 18. In March 1913 they opened an office in a rented Jerusalem house identified by a Hebrew and English sign that read "American Daughters of Zion, Nurses Settlement, Hadassah." They saw 5000 patients in their first year.

Representatives from chapters in New York, Baltimore, Chicago, Cleveland, Newark, Boston, Philadelphia, and St. Paul attended the first Daughters of Zion national convention held in 1913. At the second convention in 1914, the group formally adopted the name associated with the group's medical efforts in Palestine—Hadassah.