During that year King Charles VII of Naples and Sicily (later Charles III of Spain) decided to build a hunting lodge on the Capodimonte hill, but then decided that he would instead build a grand palace, partly because his existing residence, the Palace of Portici, was too small to accommodate his court, and partly because he needed somewhere to house the fabulous Farnese Collection which he had inherited from his mother, Elisabetta Farnese, last descendant of the sovereign ducal family of Parma.

When the Parthenopaean Republic was declared in 1799, King Ferdinand IV fled to Palermo on board Nelson's Vanguard, taking the most valuable items from the museum with him.

The first and second floors house the Galleria Nazionale (National Gallery), with paintings from the 13th to the 18th centuries including major works by Caravaggio, Raphael, Titian, El Greco, Giovanni Bellini, Simone Martini, Masaccio, Lorenzo Lotto, Giorgio Vasari, Jacob Philipp Hackert and many others.

Much of the ground floor is taken up by part of the magnificent Farnese collection of classical, mostly Roman, monumental sculpture, which survives here and in the Naples National Archaeological Museum largely intact.

Elsewhere in the palace, the royal apartments are furnished with antique 18th-century furniture and a collection of porcelain and majolica from the various royal residences In 2022, art dealer Lia Rumma donated more than 70 works made by 30 prominent Italian artists – including Vincenzo Agnetti, Giovanni Anselmo, Enrico Castellani, Luciano Fabro, and Michelangelo Pistoletto, and others – to the Italian government, to be displayed in the Museo di Capodimonte.