From 1845 the earlier house on this site, called Hale Aliʻi, was the home of the Hawaiian kings. The palace you see was completed in November 1882 and cost over $340,000, a huge sum at the time.
King Kalākaua had already reigned for nine years when a formal coronation was held on the grounds on February 12, 1883. The coronation pavilion was later moved and became a bandstand for the Royal Hawaiian Band.
After the monarchy was overthrown in 1893 the building served as the capitol of Hawaiʻi until 1969. Queen Liliʻuokalani was held in an upper room for nine months after the 1895 rebellion. The palace opened as a museum in 1978.