In 1707, four years after Peter the Great founded Saint Petersburg, he gave the grounds near the seaside to his right-hand man, Aleksandr Danilovich Menshikov.

Menshikov was deposed shortly after Peter's death, and died in exile, and the palace passed out of his family.

In 1743, Oranienbaum became the summer residence of Grand Duke Pyotr Fyodorovich, the heir of Empress Elizabeth (the future Emperor Peter III).

From 1756 to 1762, the architect Antonio Rinaldi built the Peterstadt Fortress ensemble on the bank of the Karost River for Grand Duke Peter Fedorovitch.

From the outside, the palace is a relatively simple building, single-storey except for the small central pavilion, painted in a mellow combination of ochre and yellow.