In the late 1880's, the Sisters of Mercy, though burdened with debts and subjected to hardships, disease (especially T.B.) and actual hunger, continued to expand their services, trusting that the Lord would provide.
By then, buildings had become totally inadequate to accommodate the large numbers of children attending the schools, and it became necessary to secure a larger school. A site was procured by the Sisters on a plot of ground adjoining the Convent front lawn. Construction of the new school began in March 1889. Mr. Kerwick was the builder and the carpentry was supplied by a Dublin firm. The sisters were very excited about this new school, as is evident fron the following extract from a letter, written by Mother Michael to the Callan Sisters in Parramatta, Sydney (a foundation made by the Callan Community in 1888):
"....Some one will have to send you a drawing of the schools. When finished they will really be splendid and such a size! To give you an idea - a priest at the railway station asked a man where all the timber was going: "To Callan", said the man. "They are building schools there as big as a town...."
The estimate for the building was £1,266, and a grant of £844 wass given by the National Board of Works. As the Sisters did not keep strictly to the plans sanctioned by the Board, the final bill was a lot greater. The school was ready for occupation in 1890 and had accommodation for 400 pupils
The school was recognised by the National Board of Education as a vested school, and a capitation grant of twelve shillings per pupil per year was sanctioned. As individual teachers in the school did not receive a salary, this capitation grant was based on the average daily attendance. The capitation grant was the only means of support the Sisters had and this system continued into the 1940's.
From the beginning St. Mary's Convent National School excelled in many branches of learning. Special attention was given to Music and Singing and high standards were reached in the 3R's. From the early days, provision had been made for an industrial education in the schools, and in the new school, a special room was fitted out for the purpose, fully equipped and named the Vocational School. Here an excellent vocational or technical education was given and senior girls volunteered to remain on in the school for some further years (often to the age of 18), while specialising in this training. All of this paved the way for the introduction of Secondary School Education to Callan, in the early 1940's.