The Palacio de Carlos V in reality was never completed. It was Charles I, grandson of Ferdinand II and Isabella I, to wanted the building, demolishing a wing of the Palacio Nazaries to make room for the huge Renaissance residence, which they called Palacio de Carlos V in reference to his title of Holy Roman Empire Emperor.

The square building is very impressive and contains within it an amazing circular courtyard with 32 columns. The ground floor houses the Museo de la Alhambra and the upper one is the Museo de Bellas Artes with a collection of sculptures and paintings related to Granada.