The Khan's Palace served as the residence for the large Khan family and was the center of state power, a place of justice and decision-making that influenced the fates of Eastern Europe. For two and a half centuries, representatives of the Geraev dynasty lived and ruled here. The palace did not belong personally to any Khan but was a family asset of the entire ruling dynasty.

Its construction began in the early 16th century under Khan Sahib I Gerae, simultaneously with the establishment of Bakhchisaray. The oldest buildings of the complex, such as the Great Khan Mosque and the baths of Sary-Guzel, date back to 1532. The Demir-Kapa portal, dated 1503, was relocated to the palace from another site.

Each new Khan added something of their own to the architecture of the palace, leaving a memory of themselves for future generations. Originally, there was a city garden with swings and pavilions, from which decorative pools and fountains have survived. However, the square was initially conceived as an open space for parades and celebrations, covered with river sand, without trees or water bodies. Gardeners created terraces with fruit trees on the slopes, which in the 20th century became the site of a military cemetery.

During the war between Russia and the Crimean Khanate, the palace was destroyed, but Captain Manstein compiled its description, which allowed for the building's restoration. In 1787, Catherine II visited the palace, and for her arrival, Prince Potemkin carried out repairs, adding eclectic elements to the interiors.

During the Crimean War, there was a hospital here, which was visited by Nikolai Ivanovich Pirogov. In 1908, a museum opened in the palace, and in 1912, it was visited by Nicholas II with his family. After the October Revolution of 1917, a museum of the history and culture of the Crimean Tatars was opened here.

Since 1955, the palace has become the Bakhchisaray Historical and Archaeological Museum, and since 1979, a historical and architectural museum. In the 1930s, under the guidance of architect P.I. Golandsky, repairs were carried out, during which the external decorations of the palace were whitened. In 1961 and 1964, scientific restoration was conducted, returning the palace to its original appearance.

Since October 2015, the Khan's Palace has been recognized as a cultural heritage site of federal significance.