The palatial complex at Demetrias, the political and administrative centre of the Macedonian rulers, stands on a rocky crag in the eastern part of the city, north of the agora. It was raised in the first half of the second century BC, under King Philip V of Macedon, over an earlier third century BC building, the remains of which were discovered mainly in the northeast sector. The palace was probably abandoned after the battle at Pydna in 168 BC, which marked the end of the Macedonian dynasty, and its premises, the area north of the peristyle court in particular, were subsequently occupied by potters and makers of bronze statue. The entire building was deserted after 120 BC and the area round the peristyle court became a cemetery in Roman times.

The palace sprawls over a rocky surface on several terraces. Its highest part, to the east, consists of a rectangular building with four towers at the corners. The building was probably two-storeyed, at least on its east and south sides, and much of the stylobate was founded on leveled bedrock. The sturdy rectangular towers measure 16.60 by 12.80 metres, and the exterior walls are in pseudo-isodomic masonry of grey marble, like the fortifications and most important buildings inside the city. The building consists of a central peristyle court with eight Doric columns at each side, surrounded by rooms for visitors and staircases leading to the upper floor. The columns and stylobates are of red limestone, a soft stone that chips easily, and so had to be covered with white stucco. The floor of the court was at the same level as the peristyle. At its northwest corner was a rain-water cistern, cut into bedrock with a large drain beginning at its north side. Adjacent to the southwest tower, to its south, is a sturdy buttressed wall with pseudo-isodomic masonry on both sides, which runs along the street connecting the palace with the agora. Inside the building were several roof-tiles stamped with the letters BA (the initials of King Antigonos - Basileus Antigonos) within a curve-sided square, one with the letters ΔH (Public - Demosio), and terracotta architectural members such as gutters, eaves' tiles and lion's head water-spouts. The buildings on the lower terraces to the west are earlier but were still used after the towered building was erected. Their walls of isodomic masonry are preserved right up to the level of the floor in the upper storey and the cut-outs for the wooden beams are still visible on the ashlar blocks.

The palace was first excavated by A. Arvanitopoulos in 1906, but was identified by N. Papachatzis in 1958. Further investigations were conducted by D. R. Theocharis in 1961 and by German archaeologists. Excavations since 1985 have been conducted by the Thirteenth Ephorate of Prehistoric and Classical Antiquities.