The first stone living quarters in the royal palace, later named the Terem Palace, were built in 1635-1636 for Tsar Mikhail Fyodorovich by stone craftsmen Bazhen Ogurtsov, Antip Konstantinov, Trefil Sharutin, and Larion Ushakov. The foundation for the new three-story building was the lower tier of the northern part of the palace, constructed by Alevis in 1499-1508 and raised in the second half of the 16th century.

The tiered structure of the new building with open galleries, platforms, porches, and staircases reflects the traditions of Russian wooden architecture. However, this was a new type of multi-story stone residential building, where the enfilade layout of the interior rooms, characteristic of later palaces, began to emerge.

Three galleries surrounded the palace by tiers: the lower Boyar platform, or Bed Porch, was located at the level of the ceiling of Alevis's undercroft, where the Vladimir Hall of the Grand Kremlin Palace is now situated. From this level, an open staircase led to the Front Stone Courtyard, arranged above the vaults of the Master’s Chambers, on which three stories of the Terem Palace were built. The exit to the middle gallery was later closed with a Golden Grille, a unique example of blacksmithing art. On the eastern side of the Terems was the Front Golden Porch, leading to the second floor to the royal chambers. The top tier, the golden-roofed Teremok, is located in the center of the building and is surrounded by the third platform, the Upper Stone Courtyard.

The picturesque and festive appearance of the new palace is created not only by the complex volumetric-planning solution but also by the rich decorative design of the facades. Profiled pilasters between the windows, carved and majolica cornices, intricate white stone framing of the openings with hanging weights and triangular pediments, tiles and carvings in the parapets of the galleries, gilded roofs, all harmoniously combine with the polychrome coloring of the walls and white stone details, restored during the renovation in 1966-1969. Overall, the palace resembles a precious piece of jewelry.

The original interior decoration of the chambers, except for some fragments, has not survived and was recreated under the guidance of artist F.G. Solntsev in the 17th-century style. These works were carried out in 1836-1837 during the restoration of the ancient monument, which later became part of the new complex of palace buildings during the construction of the Grand Kremlin Palace.

Today, the Terem Palace, as part of the Grand Kremlin Palace, serves as the residence of the President of the Russian Federation.