Initially a Baroque palace of Heinrich Gottfried von Spätgen, chancellor of Bishop Francis Louis of Neuburg, it was built in 1717 in a Viennese style.

In 1750, after Prussia took control over Silesia from Austria in the First Silesian War, the palace was purchased by the Prussian king Frederick the Great and was converted into his residence.

The palace was extended from 1751 to 1753 in the Baroque style with Rococo interiors designed by the royal architect Johann Boumann.

In March 1813, during the War of the Sixth Coalition with Napoleon, King Frederick William III of Prussia announced two famous manifestos: "To My People" and “To My Military Commanders”.

On 20 September 1926 the Palace Museum (Schlossmuseum) was opened, displaying an exposition devoted to Frederick the Great, reconstruction of original interiors, and a collection of Silesian art.