The building was erected in 1737–39 in the course of the city development of the boggy grounds in southern Friedrichstadt at the behest of King Frederick William I of Prussia, it was to serve as a residence for the French Baron François Mathieu Vernezobre de Laurieux (1690–1748).
The three-storey building had a courtyard open to the street, two economic wings on the left and right of the entrance, as well as extended gardens in the rear, stretching up to the Berlin Customs Wall in the west.
He had the Palais remodeled as his residence by Karl Friedrich Schinkel, surrounded by a park laid out according to plans designed by Peter Joseph Lenné, including a riding stable and an ice rink open to the public.
He moved to the Saxon capital Dresden, where he had Schloss Albrechtsberg erected by architect Adolf Lohse, who from 1860 to 1862 also refurbished the Berlin palace.
The property was managed by the valet August Sabac el Cher, an Afro-German descending from Sudanese Kurdufan, who had been "presented" to his father by Wāli Muhammad Ali of Egypt at Cairo in 1843.