After the Knights Hospitaller occupied Rhodes and some other Greek islands (such as Kalymnos and Kastellorizo) in 1309, they converted the fortress into their administrative centre and the palace of their Grand Master.

[7] During the Italian rule of Rhodes, the Ottoman-era structures of the former palace were demolished and the authorities asked architect Vittorio Mesturino, a recognized expert of medieval architecture and historical preservation, to design the reconstruction of the palace as well as in the nearby Street of the Knights of Rhodes.

Despite the lack of remains or documentation from the pre-Ottoman era, Mestrino opted to re-create a structure that also suited the Italian authorities' need for a functional government building that would benefit from the aura of the Hospitaller legacy.

[10] Mesturino's work has been criticized for shortcomings such as its inherent lack of historical accuracy and unnecessary alterations to the authentic remains of the castle,[11][12][13] being even characterized by one scholar as "horrendous fascist taste".

[14] The castle became a holiday residence for the King of Italy, Victor Emmanuel III, and later for Fascist dictator Benito Mussolini, whose name can still be seen on a large plaque near the entrance.