Situated in the old walled city near the Mandvi Clock Tower, it is the oldest palace built in old classic style by Malhar Rao Gaekwad in the late 19th century.
Used occasionally on ceremonial occasions, the palace housed the heirlooms of the royal family. It had solid guns made of gold and silver, with each barrel weighing over 100 kg. The palace ground also housed the Sheesh Mahal, or the Palace of Glass.
The white-stucco Nazarbaug Palace once held the jewels of the Gaekwad family, with the worth of the collection estimated to be around $10,000,000 in the year 1927, including a diamond necklace that carried both the Star of the South diamond, weighing around 125 carats, as well as the English Dresden. Also a part of the treasure was a cloth embroidered with precious stones and seed pearls, made to cover the tomb of Mohammad.