This elevated site was used as a burial ground for the poor of the area. Countless poor souls were laid to rest here during the Great Famine 1845-1850, many of whom died in Ballyshannon Workhouse, on The Rock, south of the Erne. They were mainly buried here in unmarked graves. Prior to the famine, victims of cholera were buried here. Sailors washed up along the nearby shores during World War Two were also buried here. The last burial was in 1945. The site was marked in 1995 by a plaque erected by the Donegal Association of New York. There are no identifiable grave markers or headstones.

The hill on which the Graveyard is situated is called Mullaghnashee, which literally means "The Hill of Hugh of the faeries". This was said to have been the burial place of Aedh Ruadh, and a royal residence for Conal Gulban (died c464) , son of Niall of the Nine Hostages who gave his name to Tír Chonaill. Later still the hill was the site of a military fortification in 1798 which today is incorporated in the site of the graveyard.

To get to the site from the centre of town, walk uphill up Main street, passing Dorrian's Hotel on your left. At the top of Main street turn left onto Bishop Street, with The Thatch Pub on the corner on your left. About 150-200m down Bishop Street you will see a sign indicating that the Paupers Graveyard is off the road on the left. There is an information notice at the entrance to the site. The site lies atop a small hill about 80m from the sign on the road. The site is directly to the west of St. Anne's Church of Ireland, but there is no access to the site directly from St. Anne's). The elevated position commands fine views of the surrounding countryside, mountains and sea. The walk from the Main Street takes 10 to 15 minutes.

Bishop Street leads eventually to Rossnowlagh.