The Naukonda Palace was constructed by Malik Ambar in 1616, but it was also occupied by Nizam Ali Khan when he was residing at Aurangabad. The entire premises of the palace comprise of nine compartments among which five are Zananas and other four are a Dewan-i-Am, a Dewan-i-Khas, a Kachari and a masjid. All the sectors consist of a garden and a water reservoir respectively. Though the major section of the Palace was ruined but then also its core area is in good condition. Hot bath, named Hamam, is situated in the vicinity to the magnificent palace and is also in good state.