The Yusupovs were one of the wealthiest families in Russia, and their palace on the Moika River was decorated and furnished with particular magnificence. The Yusupovs family acquired the property on the Moika in 1760s, and Vallin de la Mothe enlarged the small house, which occupied the site, for them. In 1830s the neo-classical facade on the riverfront was extended, and at the end of the century a long narrow wing was built on to it. At the end of this wing was a theatre in Russian Baroque style with seating for 200 (still used for concerts). The state apartments on the upper floor are decorated in neo-classical style (1840s), and the rooms on the lower floor were also redecorated in neo-classical style about 1910.

The Yusupov Palace is famous as the scene of the murder of Rasputin, the supposed miracle healer and adviser to the Tsar, by the group of young nobles in December 1916. The murder is represented in a waxworks tableau in the cellars where it took place.