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The palace was constructed in the 19th century and served as the residence of the Dadiani family. The Dadiani family was a noble family with ties to the ruling dynasties of Georgia. Notably, the last ruling princess of the family, Ekaterine Dadiani, married David Dadiani, and their descendants played a crucial role in Georgian history.

Today, Dadiani Palace serves as a museum, showcasing the historical and cultural heritage of the Dadiani family. The museum houses a diverse collection of artifacts, including items related to the family's history, art, and personal belongings. One of the notable exhibits is the death mask of Napoleon Bonaparte, which was gifted to Prince David Dadiani by Napoleon's widow, Archduchess Marie Louise of Austria.

The palace complex includes a botanical garden, which was established by Princess Ekaterine Dadiani in the 19th century. The garden is home to a variety of plant species and serves as a tranquil space for visitors.