Philip II moved his court to Madrid in 1561.

The Antiguo Alcázar ("Old Castle") was built on the location in the 16th century. It burned on December 24, 1734; King Philip V ordered a new palace built on the same location. Construction spanned the years 1738 to 1755 and followed a Berniniesque design. The new palace, directly facing the cathedral across the Plaza de Armas, was occupied by Charles III in 1764.

Theis is the official residence of the King of Spain in the city of Madrid, but it is used only for state ceremonies.