Mandalay Palace was constructed between 1857 and 1859 as part of King Mindon's new royal capital city of Mandalay, in fulfillment of a Buddhist prophecy that a religious center would be built at the foot of Mandalay Hill.

In 1861 the court was transferred to the newly built city from the previous capital of Amarapura. The plan of Mandalay Palace largely follows the traditional Burmese palace design, inside a walled fort surrounded by a moat. The palace itself is at the center of the citadel and faces east. All buildings of the palace are of one story in height. The palace was the primary royal residence of King Mindon and King Thibaw, the last two kings of the country.

On Nov. 28, 1885, the British entered the palace and captured the royal family, officially ending the Third Anglo-Burmese War. The British looted the palace, and turned the palace compound into Fort Dufferin. Much of the palace compound was burned down during World War II by allied bombing