The former palace of Rani Lakshmibai, consisting of arched chambers around an open courtyard, was built in the 18th century. In a famous incident at the palace, British troops stormed the building through a rear stable and masacred 50 of the rani's bodyguards. The palace is now a museum containing hundreds of 9th to 12th century sculptures. The durbar hall on the 2nd floor features an original painted wood-paneled ceiling.

The palace of Rani Laxmi Bai has now been converted into a museum. It houses a collection of archaeological remains of the period between 9th and 12th centuries AD.

Built by Raghu Nath-II of Nawalkar family (1769-96), this palace later formed as one of the residences for Rani Laxmi Bai. Architecturally, it a flat- roofed double-storeyed building having a quadrangular courtyard with a small well and one fountain each on either side. The palace consists of six halls and parallel corridors with multi-foiled arches and a number of small rooms. The Darbar hall approached by a flight of steps is beautifully decorated with paintings in bright colours exhibiting various floral, faunal and geometrical, motifs.

The arches are embellished with peacock and rosette patterns. Its major portion was damaged by British pounding during the war of freedom. The ground floor of the palace houses stone sculptures collected from Madanpur, Barua Sagar, Dudhai and Chandpur dating from Gupta to Medieval period.

The retaliation was quick and equally ruthless. In a notorious incident at the palace, British troops stormed the building through a rear stable and massacred 50 of the Rani 's Royal Bodyguards. The only spot worth seeing in the palace apart from the museum is the durbar hall. Located on the 2nd floor, Durbar Hall features an original painted wood-paneled ceiling.

Various plans for mutiny were hatched in this palace when the British Resident turned down the repeated efforts for reconciliation from Rani's side. When the 5th unit of the 12 Native Regiment revolted in the nearby fort, people close to Rani rose in revolt too and massacred every possible European sol of the city.