The palace is situated in the middle of the city, and used to be part of the greater Mechouar Citadel (Arabic: قلعة المشور) of which the historic defensive walls are the only major element preserved.

[3] Mechouar in general sense could designate a place for consultation traditionally established in the Maghrebi region (Arabic: mushawara), where government of sultan's affairs are managed.

[6][1][7][2]: 138  The reasons that led him to abandon the old palace near Tlemcen's Great Mosque and build a new one are unknown, but according to tradition, his decision could have been prompted by either the fear of exposing his harem to prying eyes when he realized that the inside of the palace was overlooked by the minaret he had erected for the mosque next door, or the need to create a residence of his own, where his royal dignity was asserted.

[8][2]: 138  The location of the Mechouar was formerly the site of a kasbah established by the Almoravid leader Yusuf ibn Tashfin in what was then Tagrart (now part of Tlemcen) and then used by the Almohads.

[2]: 137 [9] The palatial complex contained multiple residences, pavilions, and gardens, as well as other amenities like a mosque and a hammam (bathhouse).

[2]: 140 [12][13] Excavations prior to the reconstruction documented a part of the original palace layout and some of its zellij decoration.