Aldridge Manor House in Walsall was used as medical facility between 1916 and 1919, treating 941 injured and ill servicemen.
It was mainly staffed by volunteers, other than two qualified nurses and a village doctor.
The plaque unveiling was at 15:00 GMT.
Local historian Sue Satterthwaite, who has written a book about the hospital, said: "At the time Aldridge was a small Staffordshire village of less than 3,000, but they found enough local volunteers to perform all of the duties within the hospital such as nursing, cleaning, cooking, laundry and administration.
"Others from the village offered to serve on the committee which ran the hospital and to be involved in fundraising, going door-to-door every week collecting subscriptions."
The Aldridge Auxiliary Convalescent Hospital received its patients from the 2nd Birmingham War Hospital and as the war progressed it took more and more patients.
It began with 20 and ended with more than 60 - at one point the Manor House was so overcrowded the schoolroom of the local Methodist church was used for sleeping accommodation for 10 men.
Donations from the collieries, brickworks and munitions factory allowed the hospital to carry on.
"The flu epidemic in November 1918 was the hospital's darkest hour," Ms Satterthwaite said.
"Even the village doctor lay gravely ill and volunteers from Walsall and further afield came to help.
"Sadly a volunteer nurse, Alice Amelia Potts, and a patient, Private Matthew Nell of the Royal Inniskilling Fusiliers, died".
One of the speakers at the plaque's unveiling ceremony was Pte Nell's granddaughter Marilyn Preece.
She thanked the people of Aldridge for all they did to try to save her grandfather's life a century ago.
A former military hospital that cared for convalescent soldiers in World War One has been recognised with a blue plaque to mark the centenary of its opening.