Pacific Palisades had become, during the Nazi era, a refuge for German-speaking intellectuals and artists who had fled Europe. A few miles away at Villa Aurora lived Lion Feuchtwanger and his wife Marta — another Jewish author in exile, who had bought a Spanish-style mansion in 1943. The community that gathered around these houses included Thomas's brother Heinrich Mann, Arnold Schoenberg, Bruno Frank, and Bertolt Brecht. Charlie Chaplin and Charles Laughton, European expatriates of a different kind, were also part of the social world. Mann and his wife Katia had been offered the Villa Aurora before the Feuchtwangers bought it, but Mann wanted something new — smaller, cozier, specifically his. The design incorporated two principles that a journalist later characterized as the architecture of exile: 'In the architecture, the adaptation to the new Californian world; in the interior design, the attempt to rescue what was lost.'

Mann produced Doctor Faustus in the Pacific Palisades house — the novel in which a German composer sells his soul to the devil in exchange for creative genius, widely read as an allegory for Germany's embrace of Nazism. He also wrote the fourth volume of his tetralogy Joseph and His Brothers and a substantial number of political speeches opposing the Nazi regime. Most of the 55 radio broadcasts he recorded for the BBC — Deutsche Hoerer!, or Listen, Germany! — were made from this house and transmitted to listeners in occupied Europe. The study where he wrote still exists: its wood paneling and bookshelves are preserved. In 2019, the Thomas Mann House launched a lecture series titled 55 Voices for Democracy, directly inspired by those wartime broadcasts, with contributors including historian Timothy Snyder and political scientist Francis Fukuyama.

McCarthyism ended Mann's American chapter. Disappointed by American postwar politics and increasingly concerned about his reputation in a country that was investigating its intellectuals for communist sympathies, Thomas and Katia Mann left the house in July 1952 and returned to Switzerland. From Erlenbach, in cramped quarters without room for a sofa, he wrote to his sponsor Agnes Meyer in September 1953 that he missed his California home: 'that home which I have come to love.' He never returned to see it. In September 1953, the house sold to an American lawyer for $50,000. The family that bought it added an outdoor pool and lived there until 2010.

In the summer of 2016, the house went on the market — listed without mention of its famous former occupants. It was at risk of demolition. Fellow Nobel Laureate Herta Muller and other writers raised public alarm. German politicians, including Foreign Minister Frank-Walter Steinmeier, supported acquiring it as a place of remembrance. In November 2016, the German federal government bought the house for approximately $13 million. Renovation cost another $5 million. On June 18, 2018, Federal President Steinmeier — now serving as head of state — opened the Thomas Mann House as a center for transatlantic dialogue, during a period of considerable tension in U.S.-German relations under President Donald Trump. At the opening, Steinmeier said: 'The struggle for democracy and for a free and open society is what will continue to unite us, the United States and Germany.' The house now offers fellowships for up to five residents simultaneously.