The hotel was opened on January 16, 1937. The architect of the hotel was Elmar Lohk. Palace Hotel Tallinn immediately became the most exclusive hotel in Tallinn. The central location of the building, its architecture, interior design and service emphasized the superiority of the hotel and its objective to provide accommodation to the most extinguished guests of the capital. In Tallinn the building, which was completed in two years, was the only modern new building specially designed as a hotel.
In 1988 the building underwent a thorough reconstruction, through which the hotel became the first one in Estonia to meet the European standards both in respect of its furnishings and service. The renovated hotel was reopened for guests in 1989. Hotel was operated by new company, which was the first joint-stock company, owned by Estonians and 49% by Finnish hotel companies.
The return of the Estonian Republic to the international arena marked the arrival of foreign diplomats and the appointment of Estonian diplomats to foreign embassies.
The first to arrive was the Swedish Ambassador Lars Arne Grundberg on 29 August, who was followed by the German Ambassador Henning von Wistinghausen on 2 September, the Icelandic Ambassador Sigridur Snaevarr on 24 September and the Finnish Ambassador Jaakko Erik Kaurinkoski on 1 October. Most of the first ambassadors initially resided at the Hotel Palace. Later these first arrivals named themselves the Palace Club and held closely together.
The legendary Palace Hotel Tallinn was closed again in September 2013 to conduct thorough renovation works. Following the refurbishment the hotel features 79 rooms elegance and refinement and the fragments of the paintings of Konrad Mägi, which serve as the room design centerpiece.
The architect of the thoroughly renovated hotel is R. Valk Arhitektibüroo and the author of the interior design Vaikla Design Ltd.
Renovated Palace Hotel Tallinn re-opened its doors on June 26th, 2014.
In April 2021, Hotel Palace was the first Scandinavian and Baltic hotel to join the Radisson Individuals concept.