Zafar Mahal is the last structure made by Mughals. Mughal ruler Akbar Shah ll started this building in 1842. At that time it was known as Lal Mahal and Rang Mahal. It was a residential building (summer palace). He decided to make it here, because of the honour and presence of Hazrat Khwaja Qutubuddin Bakhtiyar Kaki’s Dargah. Later Mughal emperor Bahadur Shah Zafar added a Hathi Gate to it in 1847, and this structure got its present name, Zafar Mahal. Bahadur Shah Zafar wanted his burial to take place here, but his last wish never got fulfilled.

As we know that it was made by two emperors, thus it has two parts. The structure made by Akbar Shah ll was a single storey building with some rooms and an open area. He also built the Moti Masjid and Naubat Khana. Bahadur Shah Zafar built some new things and also added few things to the already existing structure. He erected a magnificent Hathi Gate, which is still in good condition. Apart from this, he added a floor in the structure and Chhatri in the central part of the palace. Bahadur Shah also started the festival of Phoolwaalon ki Sair in the honor of Bakhtiyar Kaki. He celebrated urs of Hazrat Kaki from this place.