Laxmi Vilas Palace, an extravagant building of the Indo-Saracenic school, was built by Maharaja Sayajirao Gaekwad III in 1890. Major Charles Mant was the architect. It is reputed to have been the largest private dwelling built in the nineteenth century and four times the size of Buckingham Palace. It remains the residence of the Royal Family, who continue to be held in high esteem by the residents of Baroda. Its ornate Darbar Hall is sometimes the venue of music concerts and other cultural events. It has a Venetian mosaic floor, Belgium stained glass windows and walls with intricate mosaic decorations. Outside of the Darbar Hall is an Italianate courtyard of water fountains. The palace houses a remarkable collection of old armory and sculptures in bronze, marble & terracotta by Fellici. The grounds were landscaped by William Goldring, a specialist from Kew Gardens. The palace is open to the public and an audio tour is available.

The Palace compound is of over 700 acres and houses a number of buildings, particularly the Moti Baug Palace and the Maharaja Fateh Singh Museum building. The Museum building was constructed as a school for the Maharaja's children. Today a large number of works of art belonging to the Royal family have been displayed in the museum. The most remarkable of these is the fabulous collection of the paintings of Raja Ravi Varma, who was specially commissioned by the then Maharaja of Baroda.