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The Palace of the Grand Dukes of Lithuania was built originally in the 15th century for the rulers of the Grand Duchy of Lithuania. The Royal Palace in the Lower Castle evolved over the years and prospered during the 16th and mid-17th centuries. For four centuries the palace was the political, administrative and cultural center of the Grand Duchy of Lithuania.

Soon after the Grand Duchy of Lithuania was incorporated into Tsarist Russia, Tsarist officials ordered the demolition of the remaining sections of the Royal Palace. The Palace was almost completely demolished in 1801, the bricks and stones were sold, and the site was bowered. Only a small portion of the walls up to the second floor survived, that were sold to a Jewish merchant Abraham Schlossberg around 1800 who incorporated them into his residential house. After the 1831 uprising, the czarist government expelled Schlossberg and took over the building as it was building a fortress beside it. Before the Second World War it was the office of the Lithuanian Army, during the World War II it was the office of the German Army, and after World War II it was used by Soviet security structures and later transformed into the Palace of Pioneers. Fragments of Schlossberg's house have become part of the Eastern Wing of the restored Royal Palace.

A new palace has been under construction since 2002 on the site of the original building. The Royal Palace was officially opened during the celebration of the millennium of the name of Lithuania in 2009.