The Museum of Applied Arts in Budapest was founded as the third in Europe, following the ones founded in London (1857) and in Vienna. The parliament session of 1872 agreed to provide 50.000 Fts for purchasing items of applied arts in the world exhibition made in Vienna in 1873. These items meant to be the basic collection for the museum to be founded. The growing collection was displayed in the staircase of the National Museum. Later the collection was taken into the building of the old art gallery (69 Sugár Road).

The opportunity to own a home only came about in 1890. At first a site was purchased (Hőgyes Endre Road) for the museum to be built. Later this site was further extended, and the State wrote out a proposal for designing a modern palace suitable for both the museum and a school of applied arts.

Ödön Lechner and Gyula Pártos won the competition, but the actual commission to begin work was only given to them in 1893. The inauguration of the building took place as the final event of celebrating the millennium, on 25 October 1896.

Right from the building of the palace fierce disputes were manifested, but its importance in the trend of international secession and in the lifework of Lechner is now an undoubted fact. The building is characterised by the oriental ornamentation of early secession. The harmony of function, high artistic standards and unique forms is secured by modern static structures.

The coloured dome adorned with Zsolnay ceramics and the open entrance hall with its wonderful ornaments still make a warm invitation to the visitors. However, these marvellous aesthetic and architectural elements still could not convince the members of the opposing party. That is how the inside paintings (Károly Miksa Reissmann) were drastically limed over by the end of the 1920's (only two rooms survived).

World War II also caused many damages in the building. The open entrance hall and the glass hall, the main dome and the corner dome of Hőgyes utca were partly destroyed. Damages of the war were restored in 1949. The museum has most welcomed its visitors in full pomp ever since.