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In the 16th century, the palace of Mikalojus Radvila the Black (Mikołaj “the Black” Radziwiłł) stood in place of the current palace (which was then known as Great Lukiškės), in a park type garden behind the city’s defensive wall, near the Gate of Vilija. In the middle of the 17th century, the Great Hetman of Lithuania, Vilnius Voivod Jonušas Radvila (1612–1655) built himself a residential palace according to the project of architect Jonas Ulrichas (who also designed Radvila Castle Palace in Biržai).
The original palace is depicted in a medal from 1653 owned by German medallist Sebastian Dadler (1586–1657). The medal was made to commemorate the inauguration of Vilnius Voivod Jonušas Radvila.
At the beginning of the 19th century, the palace belonged to Dominykas Jeronimas Radvila (1786–1813) who gave away the abandoned, uninhabited palace to Vilnius Benefactors Society which managed this place until 1940.
Palace restoration works began in 1967. At the time, there were only two remaining wings of the palace (northern and eastern), and a single northern pavilion. The second western pavilion was rebuilt in 1984.
Imaginative paintings of the palace were created in the 20th century by Vytautas Gabriūnas (1930–1992).
A branch of the Lithuanian Art Museum was established in 1990 in the restored part of Radvila Palace.