The palace was built at the end of the 17th century and was greatly expanded during the 18th century. It includes much lavish internal decoration in Baroque and Rococo styles. A large formal garden surrounded by woodland was added behind the palace, including a belvedere, a mausoleum, a theatre and a pavilion. During the Second World War, the palace was badly damaged but has since been reconstructed. The palace with its gardens is a major tourist attraction.

Friedrich crowned himself as King Friedrich I in Prussia in 1701 (Friedrich II, known as Frederick the Great, would later achieve the title King of Prussia). Two years previously, he had appointed Johann Friedrich von Eosander (also known as Eosander von Göthe) as the royal architect and sent him to study architectural developments in Italy and France, particularly the Palace of Versailles. On his return in 1702, Eosander began to extend the palace, starting with two side wings to enclose a large courtyard, and the main palace was extended on both sides. Sophie Charlotte died in 1705 and Friedrich named the palace and its estate Charlottenburg in her memory. In the following years, the Orangery was built on the west of the palace and the central area was extended with a large domed tower and a larger vestibule. On top of the dome is a wind vane in the form of a gilded statue representing Fortuna designed by Andreas Heidt. The Orangery was originally used to overwinter rare plants. During the summer months, when over 500 orange, citrus and sour orange trees decorated the baroque garden, the Orangery regularly was the gorgeous scene of courtly festivities.

Various artists were invited to decorate the interior of the palace. As the court painter of Friedrich I, the Flemish artist Jan Anthonie Coxie was commissioned to paint the walls and ceilings in various rooms of the palace. Coxie painted between 1701 and 1713 frescos and an altarpiece in the Palace Chapel and frescos in the Gobelin Gallery and Porcelain Room. The frescos in the Porcelain Room were blatant propaganda for the glorious rule of Friedrich I. They represent Aurora, the Goddess of Dawn, in her seven-horsed chariot chasing away Night and clearing the way for the Sun-God Apollo, who approaches in his chariot in a blaze of light.

When Friedrich I died in 1713, he was succeeded by his son, Friedrich Wilhelm I whose building plans were less ambitious, although he did ensure that the building was properly maintained. Building was resumed after his son Friedrich II (Frederick the Great) came to the throne in 1740. During that year, stables for his personal guard regiment were completed to the south of the Orangery wing and work was started on the east wing. The building of the new wing was supervised by Georg Wenzeslaus von Knobelsdorff, the superintendent of all the Royal Palaces, who largely followed Eosander's design. The decoration of the exterior was relatively simple but the interior furnishings were rich with painting and sculpture, textiles, and mirrors. The ground floor was intended for Frederick's wifecElisabeth Christine, who, preferring Schönhausen Palace however, was only an occasional visitor. The especially splendid decoration of the upper floor, which included the White Hall, the Banqueting Hall, the Throne Room and the Golden Gallery, was designed mainly by Johann August Nahl. In 1747, a second apartment for the king was prepared in the distant eastern part of the wing. During this time, Sanssouci was being built at Potsdam, and once this was completed Frederick was only an occasional visitor to Charlottenburg.

In 1786, Frederick was succeeded by his nephew Friedrich Wilhelm II, who transformed five rooms on the ground floor of the east wing into his summer quarters and part of the upper floor into Winter Chambers, although he did not live long enough to use them. His son, Friedrich Wilhelm III, came to the throne in 1797 and reigned with his wife, Queen Luise, for 43 years. They spent much of this time living in the east wing of Charlottenburg. In 1804, following Prussia's defeat at Jena-Auerstedt, Napoleon marched into Berlin and settled in the palace, which became his headquarters. Their eldest son, Friedrich Wilhelm IV, who reigned from 1840 to 1861, lived in the upper storey of the central palace building. After Friedrich Wilhelm IV died, the only other royal resident of the palace was Friedrich III, who reigned for 99 days in 1888.

The palace was badly damaged in 1943 during the Second World War. In 1951, the war-damaged Stadtschloss in East Berlin was demolished and, as the damage to Charlottenburg was at least as serious, it was feared that it would also be demolished. However, following the efforts of Margarete Kühn, the director of the State Palaces and Gardens, it was rebuilt to its former condition, with gigantic modern ceiling paintings by Hann Trier. From 2004 until early 2006, Charlottenburg Palace was the seat of the president of Germany, whilst Schloss Bellevue was being renovated.