The building was begun in 1763, after the end of the Seven Years' War, under King Friedrich II (Frederick the Great) and was completed in 1769.

In an architectural form, Frederick the Great sought to demonstrate the power and glories of Prussia attributing it as fanfaronade, an excess of splendor in marble, stone and gilt.

While Frederician Rococo was established at Sanssouci, Frederick the Great had the New Palace built in varying forms of Baroque architecture and decoration, with some deviations.

Repointing the mortar of the joints proved to be an arduous and expensive task, therefore Frederick had the brick covered in stucco and painted in such a way that even tourists today are fooled by the deceptive finish.

After the death of Frederick the Great in 1786, the New Palace fell into disuse and was rarely occupied as a residence or entertainment venue.

The accession of Wilhelm II saw renovation and restoration within the palace being carried out with the installation of steam heating, bathrooms in state apartments and electrification of the chandeliers which Frederick the Great had collected from across Europe.

In 1890 the so called "Tip of Mount Kilimanjaro" was installed in the Grotto Room, after German geographer Hans Meyer gifted it to Kaiser Wilhelm II.

The New Palace was built as a summer residence for the royal family between 1763 and 1769 using four architects: Johann Gottfried Büring, Heinrich Ludwig Manger, Carl von Gontard, and Jean-Laurent Legeay.

At the center of the building are two banqueting halls on the ground floor and another two on the first, with royal apartments adjoining, including anteroom painting galleries.

Part of the design of the Groto Hall is a marble floor depicting marine animals and plants and an 1806 ceiling painting, Venus and Amor, the Three Graces and Putti.

Large mirrors face the windows, while the three-part ceiling painting by Christian Bernhard Rode depicts morning, noon, and night.

Positioned at the pilasters are twelve statues, depicting eight Brandenburg Prince-electors and four famous "emperors": Julius Caesar, Constantine, Charlemagne and Rudolph II.

The stage is framed by gilt palm trees, with Thalia and Melpomene above, holding a plaque with Frederick's initials.

[2] After the revolution of 1918, which overthrew the monarchy, the Weimar Republic allowed 34 train wagons of furniture from the palace to be sent to the exiled Wilhelm II at Huis Doorn in the Netherlands.