Gagan Mahal was built in 1561 by Ali Adil Shah I, the second ruler of the Adil Shahi dynasty. Unlike the name suggests, it was not intended to be a residential palace but served as a durbar hall for the Sultan to hold court and entertain guests. The palace witnessed many historical events, including the reign of several Adil Shahi rulers and the Mughal invasion. It later fell into the hands of the Marathas and then the British before becoming a protected monument under the Archaeological Survey of India.