The palace was constructed between 1677-1683 as a residence for Jan Dobrogost Krasiński, the Voivode of Płock. Krasiński, who was also a royal clerk, came from an old Mazovian noble family and inherited a significant fortune. He desired to build a grand palace in the capital to reflect his political ambitions and pride. He was well-versed in French culture and architecture and made a conscious effort to hire renowned French artists and architects for the project. The palace was designed by Tylman van Gameren, a Dutch architect who was educated in Italy and brought to Poland by the Lubomirski family. He was also responsible for designing structures for the Royal Family, noble families, and the Catholic Church.
In addition to van Gameren, other architects including Joseph Bellotti, Jacob Solari, Izydor Affaita and Maderni were involved in the construction process as contractors, material suppliers, and quality control personnel. The palace was decorated with pediment reliefs depicting the triumph of the Roman commander Manius Valerius Maximus Corvinus Messalla and sculptural work, all created by German sculptor Andreas Schlüter. Krasiński kept a detailed accountancy book to track progress during the construction process.
The Palace was built on a large property that once housed an old manor house and small garden belonging to Jan Krasiński. Krasiński expanded the gardens by purchasing surrounding plots of land. The palace was designed in the French style, with a courtyard and garden, but was never fully completed. The first floor featured a porte-fenêtre (vertical French door and window) crowned with a cartouche, supported by two angels bearing the founder's monogram, JK for Jan Krasiński. The frescoes in the palace were created by Michelangelo Palloni, who was the court painter for John III Sobieski. The vestibule's plafond and frescoes, as well as the moulding, stucco heads of pilasters, and armorial cartouche on the façade from the garden side were made by unknown artists under the supervision of Joseph Belloti. The lost paintings in the vestibule, which were destroyed during World War II, were also created by Michelangelo Palloni.
In 1765, the palace was purchased by the Commonwealth and became the seat of the Treasury Commission. After a fire in 1783, it was remodeled according to the design of Domenico Merlini. During the interwar period, the palace housed the Supreme Court of Poland. During World War II, the palace was burned down and partially demolished by the Germans, with the outer shell remaining mostly intact. Today, the palace is a part of the Polish National Library's Special Collections Section and specializes in manuscripts and old prints from the Załuski Library. However, only 5% of the former collection remains in the palace, with the rest having been deliberately destroyed by the Germans after the collapse of the Warsaw Uprising in October 1944.