The palace, built by Sultan Abdülâziz, was designed by the palace architect Nigoğayos Balyan and constructed by his sons Sarkisand Hagop Balyan between 1863 and 1867, during a period in which all Ottoman sultans built their own palaces rather than using those of their ancestors; Çırağan Palace is the last example of this tradition. The inner walls and the roof were made of wood, the outer walls of colorful marble. A beautiful marble bridge connects the palace to the Yıldız Palace on the hill behind. A very high garden wall protects the palace from the outer world.
The construction and the interior decoration of the palace continued until 1872. Sultan Abdülâziz did not live long in his magnificent palace - he was found dead inside on May 30, 1876, shortly after he was dethroned. His successor, his nephew Sultan Murad V, moved into Çırağan Palace, but reigned for only 93 days. He was deposed by his brother Abdülhamid II due to alleged mental illness and lived there under house arrest until his death on August 29, 1904