Built in 1645, this was the palace built by the ruler, Deldan Namgyal as the summer palace for the Ladakhi kings. It is the oldest palace in Ladakh. With numerous chortens displayed below the monastery and palace and are a mark of the interest taken by the kings and queens of Ladakh.
The King Deldan Namgyal built another gompha close to the palace with a huge 12 meters statue of Buddha, crafted from copper sheets and covered with sheet of gold. It is the biggest metal statue of Buddha in Ladakh and was made in 1655 out of copper from Zanskar. It was built in parts at the Zanstil palace and then assembled at Shey. The offerings of holy signs, grains and gemstones are inside the statue.