Before the current structures existed, the Ashanti kings ruled from the Aban Palace, a building that impressed even the colonizers who would eventually destroy it. British visitors noted its scale and its contents, which reportedly included rows of books in many languages. During the War of the Golden Stool in 1900, British soldiers demolished the Aban Palace with explosives. The destruction was deliberate, aimed at breaking the symbol of Ashanti sovereignty. In 1874, Sir Garnet Wolseley's soldiers had already burned the first royal palace along with other structures in Kumasi during an earlier Anglo-Ashanti conflict. By the time Asantehene Prempeh I returned from exile in the Seychelles in 1924, there was no palace left to return to. He took up temporary quarters in the Asafo neighborhood while the British constructed a replacement.

The British colonial government completed the new palace in 1925, intending it as a residence for Prempeh I. But the returning king carried a principle sharper than any treaty: he would not be indebted to the power that had exiled him. Prempeh I refused to occupy the building until the Ashanti people had paid for its construction in full. They did, and only then did he move in. The gesture transformed a colonial structure into an Ashanti possession. It was a quiet act of sovereignty, accomplished not through warfare but through the refusal to accept a gift with strings attached. Two kings lived in this palace: Prempeh I, the 13th Asantehene, and Osei Agyeman Prempeh II, the 14th, who was knighted by the British as a KBE despite the empire's fraught history with his predecessors.

In 1995, after Opoku Ware II commissioned a new palace nearby, the original 1925 building was converted into a museum. The new palace blends traditional Ashanti architectural styles with modern design. Its facilities include a 1,200-square-foot main hall, a conference room, an outdoor space, and an entrance lobby. The transition from residence to museum gave the old palace a second life as a keeper of Ashanti memory. Inside, visitors find life-sized wax effigies of former kings and queens, the Asanteman's first television set, and historical items tracing the lineage of Ashanti leadership. Opoku Ware II was the first king to inhabit the new palace, living there until his death in 1999.

The current Asantehene, Osei Tutu II, has occupied the new palace since his enstoolment in 1999, making Manhyia an active seat of governance rather than a historical relic. In April 2024, an ultra-modern conference centre was added to the palace grounds, reinforcing Manhyia's role as a place where traditional authority meets contemporary function. The palace sits roughly one kilometer from the Centre for National Culture in Kumasi, anchoring a neighborhood where Ashanti cultural institutions cluster. For the Ashanti, Manhyia is not merely where the king lives. It is where the people gather, as its name promises, to resolve disputes, celebrate festivals, and maintain the continuity of a kingdom that has outlasted every attempt to dissolve it.