The first Gråsten was a small hunting lodge built in the mid-16th century. After it burned down in 1603, a new palace was built, probably on the site of the modern day south wing.
Chancellor Frederik Ahlefeldt, who owned Gråsten from 1662-82, and his son built a huge baroque palace on the site, but it burned down in 1757. Only the chapel and some pavilions survived. The south wing of Gråsten Palace was built in 1759 and the middle building in 1842.
The palace was taken over by the Augustenborgs after 1864 and major renovations were made at the start of the 20th century.
The state took over the palace and it was subsequently used as a court, a residence for the judge and chief constable and as a library.
After extensive restoration work, Gråsten Palace was assigned as summer residence to the crown prince and his wife (later King Frederik IX and Queen Ingrid) in 1935. Queen Ingrid used the palace as her summer residence until her death in november 2000.
Gråsten Palace is owned by the Danish state, run by the Palaces and Properties Agency and placed at the disposal of the Royal Family.