At the time the main city residence of the Sheremetevs was situated at the Spit of Vasilyevsky Island, so the land near the bank of Fontanka was used as a country estate.

In late 1730s, when in the close vicinity Bartolomeo Rastrelli built gorgeous residences for the Empress Elizabeth, he invited an architect Dmitriev to build here a one-store stone palace.

Twenty years later the building was reconstructed by Savva Chevakinsky and Fyodor Argunov and decorated to suit the nearby palaces, presumably on the basis of Rastrelli's schemes.

[4] Apart from the luxurious interiors, the palace contained an extraordinary collection of arts — paintings of Raphael, Antonio da Correggio, Paolo Veronese, Rembrandt, etc.

The famous Russian poet Anna Akhmatova lived in the Fountain house twice, first in 1918–1920 with her second husband Vladimir Shileyko (in the South garden wing).