Construction of the Akbari Sarai began in the mid 1550s under the rule of Islam Shah Suri, a rival dynasty that preceded the Mughal Empire. The structure was never built during the reign of the great Mughal Emperor Akbar despite its name translating to Palace of Akbar. Modern scholars traced the true origins of the monument back to the Suri period to correct this historical misattribution.
The complex provided fodder for animals, hot and cold water, and bedsteads free of charge to all who sought shelter within the walls. A physician and a resident baker lived on-site to attend to the health and dietary needs of the guests, while a water well located outside the walls ensured a steady supply of fresh water. The site also operated as a mail station known as a dāk chowkī managed by an official called a Shāhnā with several assistant caretakers.
The cells lining the courtyard and the grand gateways were added later during the Shah Jahan period in the mid 1600s. The mosque within the complex dates from the earlier Suri period, while the gateway was designed to be visible from a great distance acting as a beacon for travelers approaching the sacred grounds. The decorative elements and style of the structure indicate that the palace and the gateways to the tomb were constructed at the same time.
Maharajah Ranjit Singh converted the complex into a cantonment for one of his foreign generals Musa Farangi in the 19th century. The site suffered severe damage during the British era when it was repurposed as a rail depot following the construction of the nearby rail line. This transformation from a sanctuary for wayfarers to a military stronghold and then to a railway hub illustrates the volatile history of the region.
The Akbari Sarai along with the Tombs of Jahangir and Asif Khan was inscribed on the tentative list of UNESCO World Heritage Sites in 1993. This recognition highlighted the importance of the site as one of the best-preserved examples of Mughal architecture in Pakistan. The quadrangle covers a total area of 12 acres and measures 797 feet by 610 feet making it one of the largest caravan inns of its time.