The hotel consists of a portion of the Villard Houses, built in the 1880s by McKim, Mead & White, which are New York City designated landmarks and listed on the National Register of Historic Places.

The Villard Houses, arranged in a U-shaped plan, consist of three wings surrounding a central courtyard on the east side of Madison Avenue.

Northwood Investors, an American real estate investment firm, bought the hotel from the government of Brunei in 2011 and renovated it.

[5] The Villard Houses were erected as six separate residences in a U-shaped plan, with three wings surrounding a central courtyard on Madison Avenue.

[37] Additionally, when the eastern section of the Villard Houses' north wing was demolished in the 1970s, one room was reconstructed on the third floor of the Palace Hotel.

[37] The Champagne Suite has a marble floor, a double-height "Grand Parlour", a tasting lounge, and a terrace with a fireplace and hot tub.

Roth's original plan had called for vertical travertine marble piers rising the height of the tower, which would be connected at the top by arches.

[65][66] Huxtable spoke negatively of the revised plan, saying: "By any measure except computerized investment design, the results are a wretched failure.

[74] The hotel tower's facade was to be made of dark glass and aluminum panels,[29][73] similar to what would ultimately be built.

[77] The commission released draft legislation in early June 1976, which would enable the hotel to build 15–18 percent more interior space than would be normally allowed.

[70] Helmsley threatened to cancel the hotel if it was not approved within the month, since he was scheduled to pay $700,000 in annual real estate taxes starting on July 1.

[18][87] Morse-Diesel Inc. was hired as the general contractor for the hotel by mid-1977, and demolition of existing structures on the site was expected to begin later that year.

The lobby was renovated with marble and wood paneling as well as gilded columns, while the old library was refurbished with 4,000 false books.

[29] In June 1979, Helmsley leased 30,000 square feet (2,800 m2) in the Villard House's north wing to Jacqueline Kennedy Onassis.

[97] Two months later, Capital Cities Communications, which had been a tenant in one of the Villard Houses on 24 East 51st Street, leased space in the tower.

[20] Thomas Hine, a reporter for the Hartford Courant, said the Helmsley Palace "has something to show for its claim to being the best New York has to offer", though he felt the tower reduced the appearance of the houses.

[105] Upon its opening, many potential guests of the Palace Hotel mistakenly contacted a similarly named budget hostelry at 315 Bowery, prompting complaints from the latter's operators.

[111][114] The finances of the Helmsley Palace were not publicly revealed, but the hotel's spokespersons maintained that it was still performing well financially, despite a general economic recession.

[111] Leona Helmsley maintained a strict and intolerant management style that involved firing staff members for trivial mistakes.

[121] The limited partners claimed that Leona Helmsley's conviction was part of the reason behind the hotel's declining finances.

Leona Helmsley reportedly requested that people not mention the Palace Hotel in her presence because, according to Crain's New York, she was "distraught" over the possibility of losing control.

[39] A dispute arose in the late 1990s when Sultan Bolkiah alleged his brother Prince Jefri was misappropriating state funds to pay for his own personal investments.

[138][139] A further dispute occurred the same year when the archdiocese was scheduled to increase the annual rent under the New York Palace and the Villard Houses.

[146] Northwood Investors, an American real estate investment firm, bought the hotel from the Sultan of Brunei in May 2011 for $400 million.

[150][151] Jeffrey DeBeers, as well as Amy Beckman of HOK, renovated the hotel's lobby, bars, restaurants, and specialty suites.

[167] Baseball player Derek Jeter had a temporary residence in the hotel, while musicians Michael Jackson and Whitney Houston also stayed there as a vacation home.

In 2005, the President of the Congo, Denis Sassou-Nguesso, stayed in one of the triplexes for $8,500 per night while visiting the headquarters of the United Nations.

[168] Other world leaders to have stayed at the hotel include Indian Prime Minister Narendra Modi,[169] U.S. Presidents Barack Obama,[170] and Donald Trump.

[172] In the 2000s, the hotel was popularized by the TV show Gossip Girl,[161][173] where it was depicted as the residence of Blake Lively's character Serena van der Woodsen.

[174][175] In 2017, magician Steve Cohen started performing his show Chamber Magic at the Lotte New York Palace five times a week.