The hospital was ordered to shut its doors by December by a court that ruled in favor of the Ministry of Property of the Republic.
The ministry argued the building had been unlawfully given over to a charitable organization that runs the hospital.
But the verdict followed an earlier lawsuit filed by the Federal Security Service (FSB) that alleged the hospital was run by "Wahabbists" -- a blanket term often used to describe followers of radical Islamic ideology.
The building also sits in a prime location in the center of Makhachkala, the capital of the predominantly Muslim republic.
The decision, made by the arbitration court at the end of April, leaves maternity care beyond the means of all but a few women in the North Caucasus republic and beyond.
"We've been working for about 14 years," hospital director Aishat Magomedova said. "In that time we've seen and given necessary treatment to about 40,000 women, and about 500-1,000 women have been hospitalized in the 20 beds that we have. Now after these 14 or so years, they don't want us to exist anymore."
Magomedova set up the hospital in 1994 in a dilapidated former clinic and has treated women from Daghestan as well as nearby Chechnya and North Ossetia.
The hospital is the only such facility in the republic where women can give birth free of charge -- no small benefit in a region where large families are still the norm.
Magomedova says it relied on charitable donations as well as staff providing services for free.
Now its fate is unclear. Magomedova says she's had an offer from an organization in Chechnya to relocate there. But first, she says she will appeal the court decision.
RFE/RL's North Caucasus Service with additional reporting by Ekho Moskvy and kavkaz.org.uk