At the beginning of the 18th century, Count Jan Václav Gallas (1671–1719) purchased several adjacent houses and plots and commissioned the construction of a three-wing Baroque palace. Around the turn of the 17th and 18th centuries, he had the northern wing and the left risalit built, soon followed by a comprehensive reconstruction. In the winter of 1712–1713, he commissioned the Viennese court architect Johann Bernhard Fischer von Erlach, who prepared the project plans. The construction was carried out by several builders, including Tomas Haffenecker. Fischer von Erlach also designed the sculptural decoration and the grand interiors.

The exterior sculptural decoration and the main staircase were created by Matyáš Bernard Braun and his workshop. At the time of Jan Václav’s unexpected death in 1719, the rough construction was completed. The palace was finished by his heirs. In the 1720s, Filip Josef Gallas (1703–1757) completed the decoration of the main staircase and several representative halls and salons, painted by the renowned artist Carlo Innocenz Carlone. During the Prussian siege and occupation of Prague in 1744, the palace was completely looted.

At the end of the 18th century, Kristián Filip Clam-Gallas (1748–1805) completed the interior decoration and furnishings and had the private theatre adapted. The palace theatre, ballrooms and concert halls made the palace a major cultural and social centre of Prague. At the end of the 1790s, thanks to the activities of Kristián Kryštof Clam-Gallas (1771–1838), Ludwig van Beethoven performed here, and according to tradition possibly also Wolfgang Amadeus Mozart or the singer Josefína Dušková. The palace theatre operated between 1812 and 1828.