The palace, which belonged to the Chodkiewicz family for over 200 years, was located in the very heart of Vilnius, on the border of civitas Ruthenica, i.e. the area where Ruthenian settlement had developed since the 13th/14th century. The seat stood directly on the prestigious via regia, next to St. Paraskeva (Piatnitskaya) Church with its cemetery, hospital and houses, standing out from the bourgeoisie buildings next to it and competing with the nearby Pacas Hetman Palace on the opposite side.

The site of the palace of one of the most prominent Lithuanian families was previously occupied by a brick building dating back to the 15th century. It was probably purchased just before 1600 by Jan Karol Chodkiewicz (1561-1621), at that time a Lithuanian envoy and starosta of Samogitia, and soon a hetman (1600 and 1605) and voivode of Vilnius (1616).

Known as the Lithuanian Achilles, an outstanding military commander, as well as a fortifier (Lachowicze, Stary Bychiv) and founder of churches and monasteries (Bernardine monks in Kretinga, Jesuits in Kroże), Jan Karol Chodkiewicz steadily increased the area of his estate in the following years by adding neighbouring plots of land. Work on the palace continued even after 1609, with Kacper (Gaspar) being the artist active in this and other investments by the hetman.

The work of enlarging the estate was continued by Chodkiewicz's heir, the son of his uncle Hieronim from the Suprasyl line - Krzysztof (d. 1652), castellan of Vilnius (1636) and voivode of Vilnius (1642). On 19 September 1643, he applied for the demarcation of the boundary between the area belonging to the palace and the property of the St Paraskieva Orthodox Church. The document shows that the Vilnius governor built a boundary wall at his own expense, next to which wooden residential and farm buildings were erected. Provision was also made for the joint organisation of a well and... a lavatory, which Chodkiewicz was to pay for.

The seat, destroyed during the Moscow occupation, was rebuilt in the 1760s-70s. At that time, the renovation work was carried out by, among others, tenants acquired by the next possessor - Lithuanian objector Jerzy Karol Chodkiewicz (1646-1691) and his mother Izabela née Lackie. The façade of the residence was decorated with figures of dragons, hence the palace came to be called Pod Smokami (Under the Dragons). In the 18th century, their representations served as puropuses.

Significant changes were made to the palace in the time of Jan Mikołaj Chodkiewicz, from whom the contemporary living representatives of the family descend. After the plot was enlarged by a neighbouring building on the side of the St. Paraskieva church, the residence was rebuilt by Abraham Würtzner in 1754-1762. The contract with the architect was signed on 10 February 1754, and work on the roof was completed in August of the following year. According to surviving accounts, there were weeks when 7-8 bricklayers and their assistants stood at the walls, supervised by such master masons as Mikołaj Wiśniewski, Marcin Rusewicz and Marcin Sirkwicz, but also by the architect himself, who was sometimes replaced by his colleague Franciszek Offert.

As a result of the work carried out, a mezzanine was added in the central part to the two-storey and two-bay edifice built on a roughly rectangular plan, i.e. shaped back in the 17th century. The building was crowned with three stucco-decorated gables, of which the central one, i.e. above the highest part, contained the Chodkiewicz family coat of arms. The mansard roof was covered with tiles, and a gate with a cross vault was placed on the axis of the façade. The staircase leading to the parade floor (piano nobile) was located in the south wing. The largest hall was located in the front passage, above the gate. It was connected to the sideboard, which served as a place to store dishes and prepare meals before serving. The palace was enclosed by wings with residential and economic functions.

In 1812, the palace became the property of Wojciech Pusłowski (1762-1833), a member of the Four-Year Sejm, but also a skilful entrepreneur who made a fortune of millions by, among other things, buying up dilapidated estates and organising various manufactures. He also carried out construction work on behalf of the government at the then Vilnius Academy. It was during his time that the classical character of the building was finally formed - a conglomerate of the front palace building, wings and outbuildings, which enclose an irregular courtyard resembling the letter T, stretching between Velika (Didžioji g.) and Savich II (Bokšto g.) streets. From this period, i.e. from around 1825, tiled cookers, window and door woodwork, wooden stairs and painting and stucco decoration have been preserved in the body of the building. The effect of the works was admired by the people of the time, and Michał Baliński described the palace as "the most beautiful private house in Vilnius".

In 1834, the building became part of the Medical and Surgical Academy, which was created after the Tsar closed down the Vilnius Academy. At that time, a number of renovations were undertaken in the building to adapt especially the annexes to their new functions. Since 1990, Chodkiewicz Palace has been the seat of Lietuvos nacionalinis dailės muziejus.