The palace was built between 1773 and 1781 in a braided Baroque and Rococo style by the Jesuit Viennese hydrology expert and architect Gabriel Gruber who as the builder of the Gruberjev kanal drainage channel used the palace as a physics and hydraulics research institute. Testament to this is that he equipped the palace with its own astronomical observatory for the purposes of Gruber's School of Hydraulics and Mechanics. Gruber was later deported to Russia around 1784.
In 1840, the palace was purchased by Anton Virant who merged the property with his own adjacent and used it as a guest accommodation and cafe named "Zur Sternwarte" (meaning observatory). In 1887, it was bought by the Carniolan Saving Bank and in 1965, become the National Archive of Slovenia, undergoing renewal in 1990.
The palace is designed in the late Baroque and Rococo style by highly shilled stucco artisans who commissioned to decorate its façade and interior. The Palace is noted for its oval staircase in cool pastel colors of the era and braided and is topped with a domed ceiling designed allegorically, it is a fresco of trade, crafts and technology, completed in 1786 by Andrej Herrlein, two years after Gruber himself had been forced to leave.
On the first floor of the palace is a chapel adorned with paintings depicting the life of the Virgin Mary which were painted by the Austrian painter Martin Johann Schmidt, also known as Kremser Schmidt. The facade of the palace is ornamented with the portrait of Gabriel Gruber, created by the sculptor Janez Pirnat.