Built between 1773 and 1785 for Antoni Jabłonowski, according to the design of Jakub Fontana and Domenico Merlini. From 1817 to 1819, it was rebuilt into a city hall based on the project by Fryderyk Albert Lessel and Józef Grzegorz Lessel, taking over the functions of the demolished old town hall in the Old Town Market Square. Around 1823, belvederes were added to the palace's roof, serving as a base for an optical telegraph. At the same time, a building was constructed at the back of the palace to serve as a police jail.
During the January Uprising in 1863, the palace was destroyed by a fire. Reconstruction in the Neo-Renaissance style took place between 1864 and 1868, based on the design by Józef Orłowski. It gave the palace a new shape with gables on the roof, balconies, a new wing replacing the Łagiewnicki family house, and a distinctive tower used for observing that part of the city by the Warsaw Fire Brigade (the tower was called a "watchtower"), with clocks on its three sides. In the Berg Room (later known as the Dekert Room), the ceiling was adorned with the ceiling painting "Triumph of Truth" by Marcello Bacciarelli, transferred from the ballroom of the Primate's Palace. Central heating was installed in the building in the late 19th century.
The Council Chamber meetings took place in the ballroom (called the Aleksandrowska until 1915), and the municipal council deliberated in the portrait room adorned with 25 portraits of famous Poles.
In October 1917, on the occasion of the centenary of Tadeusz Kościuszko's death, a commemorative plaque was unveiled on the facade of the palace. Another plaque was unveiled in June 1918 on the occasion of the similar anniversary of the death of Jan Henryk Dąbrowski.
Between 1936 and 1939, further modernization of the palace took place based on the design by Oskar Sosnowski, which included the reconstruction of the roof in 1936 and the construction of a new seven-story building facing Daniłłowiczowska Street. In September 1939, during the defense of Warsaw, Stefan Starzyński commanded the civilian defense of Warsaw from the city hall. After the destruction of part of the Civil Commissioner's office building at the Warsaw Defense Headquarters, it was moved to the basement of the palace.
After the damage sustained during World War II, the burned ruins of the palace were demolished in 1952, and the foundations were filled in. In 1964, a monument to the Heroes of Warsaw was unveiled in the place where the palace once stood.
At the turn of 1989/1990, a decision was made to rebuild the northern side of Teatralny Square. Between 1995 and 1997, the palace building was reconstructed to serve as the headquarters of Bank Rozwoju Eksportu and Citibank (Poland), preceded by archaeological excavations. The building was constructed in reinforced concrete, preserving the original structure (including the reconstruction of the tower) and reconstructing the facade to its state before 1936. The remaining elevations of the palace have a contemporary appearance. During the reconstruction, fragments of the palace's furnishings were also recovered (two fragments of cast-iron supports and a cast-iron column from the ballroom), which were displayed in the courtyard. The authors of the reconstruction project were Jerzy Czyż, Lech Klajnert, Janusz Matyjaszkiewicz, Marek Różański, and Maciej Szwedziński.
In 2011, a plaque commemorating President Marceli Porowski of the Warsaw Uprising was unveiled on the building.
In 2017, a plaque commemorating Julian Kulski was unveiled on the building.