The original Grand Central Palace was constructed in 1893 on the block bounded by Lexington Avenue, Depew Place, and 43rd and 44th Streets.

[3][4]: 98  The original Palace, a six-story structure made of brick, contained 310,000 square feet (29,000 m2) of floor space.

[7] New York Central bought two blocks of land east of the future terminal, bounded by Lexington Avenue, Depew Place, and 43rd and 45th Streets, in December 1904.

[12] By that time, trains on the Harlem Line were electrified, and its operations moved to the basement of Grand Central Palace.

[14] The Palace was used as the terminal for all three lines while the old Grand Central Station was being demolished in sections,[11]: 106–107  a process that started in 1910.

[16][17] The 13-story building, with twice as much floor space as the previous structure, was located on the west side of Lexington Avenue between 46th and 47th Streets, occupying the air rights over the railroad tracks leading into Grand Central Terminal.

[4]: 111  It was the first structure designed as part of Terminal City, a series of commercial developments that were built after Grand Central's formerly open-air rail yards were covered over.

Its location and the proximity of Grand Central Terminal spurred the construction of a hotel district in the area.

[26] The following year, Catts proposed $500,000 worth of improvements to the Palace as part of the construction of a $3 million, 18-story office building on an adjacent empty plot.

The plan entailed converting the Grand Central Palace into an office building and attaching it to the adjacent structure via an arcade.

[32][33] Though the Count of Peracamps, a Philippine businessman, visited the Palace in March of that year in an effort to promote the proposed trade center,[34] the deal did not go through.

[35] In 1933, Heckscher offered to sell the Grand Central Palace to the federal government for $6 million, so it could be replaced with a post office facility.

At the time, the Palace was located atop part of the Grand Central Terminal's storage yards, and there was a mail chute from the building to the tracks underneath.

Because the New York Central Railroad still owned the land underneath the Palace, if the transaction were successful, only the air rights above the tracks would have been sold.

[46] However, the next month, the federal government signed a lease agreement to convert the four lower floors into 171,000 square feet (15,900 m2) of office space.

[49] By 1957, the du Pont estate proposed constructing five office buildings on a three-block site near Grand Central Terminal that included the Palace.

The first floor, at ground level, had cafes that flanked the entrance to Lexington Avenue on the east, as well as a large exhibition area.

[55] Other early tenants included the flower show,[56] amateur boxing,[57] and exhibits from Catholic school students.

[58] However, the structure stood empty for the rest of the year, when it held some exhibits from the World's Columbian Exposition in Chicago.

[60] The first auto show held in Grand Central Palace occurred in 1907 and was hosted by the Automobile Club of America.

[65] The Westminster Kennel Club Dog Show was held at the Grand Central Palace, as well as the Exposition of Architecture and Allied Arts in the late 1920s and early 1930s.

[23] Starting in October 1942, the Grand Central Palace was turned into an induction center for the U.S. Army,[39][40] being used as such until September 1945.