Heavily damaged in World War II and later dismantled by the East German communist regime, the partial reconstruction, with historic facades and a modern interior, was completed in late 2013.

After the fall of the Berlin Wall, the ruling Party of Democratic Socialism (the former East German communist SED) twice rejected initiatives to reconstruct the Palace.

However, in 1996 strong encouragement was provided by the "Potsdam Project" run by the Summer Academy for Young Architects of the Prince of Wales's London Institute of Architecture.

[3] A Berlin lawyer and real estate entrepreneur, Michael Schöne, who bought and renovated old buildings, was troubled by the wasteland of the site, believing that Potsdam would never work until its core was restored.

[4] However, shortly afterwards the PDS politician Birgit Müller, then chairman of the City Council, agreed to support the reconstruction of the main portal of the Palace, the Fortuna Gate.

Large donations by the television presenter Günther Jauch and the Federal Association of the German Cement Industry, led by Jürgen Lose, made the rebuilding of the Fortuna Gate possible.

The Left Party was stunned when almost 50 percent of voters turned out (far more than for elections for the European parliament), and voted decisively for reconstruction of the Palace.

"It's not what we wanted", the Left Party's parliamentary leader Hans-Jürgen Scharfenberg stated following the vote, "But we'll respect people's decisions".