Prince Muhammad Azam Shah began the construction of the massive fortress in 1678. He was the third son of Emperor Aurangzeb and intended the project to be the official residence for the governor of the Mughal province of Bengal, Bihar, and Orissa. The work was left incomplete after just fifteen months of his vice-royalty in Bengal.
The construction of the fort came to a sudden and permanent halt following the death of Shaista Khan's daughter, Iran Dukht Pari Bibi, in 1684. Shaista Khan, the Subahdar of Mughal Bengal who took over the project, became convinced that the fort was cursed by bad omens after his beloved daughter passed away. Her tomb, covered by a false octagonal dome and wrapped in a brass plate, stands today as the emotional core of the site.
The name Lalbagh means Red Garden and refers to the reddish and pinkish hues found in the Mughal architecture of the complex. The area acquired its current name in 1844, replacing the original name of Fort Aurangabad. This name change marked a shift in the site's identity from a military stronghold to a cultural landmark.
Iran Dukht Pari Bibi is buried within the walls of the fort itself, and her tomb became the central feature of the complex. The tomb is surrounded by eight rooms and an inner chamber lined with white marble. It stands today as the emotional core of the site, covered by a false octagonal dome and wrapped in a brass plate.
The tunnels within the fort were sealed after British researchers sent an elephant and dogs to investigate the passages, only for them to vanish without a trace. These tunnels are the subject of dark legends claiming that many defeated sepoys of the Sepoy Revolution of 1857 tried to escape through them and lost their lives. The Department of Archaeology of Bangladesh has confirmed the existence of these tunnels, but their full extent and purpose remain unknown.
Once located directly beside the Buriganga River, the fort now stands at a distance as the waterway has retreated from its vicinity over the centuries. European paintings from the 18th and 19th centuries, such as those by Johan Zoffany in 1787 and Robert Home in 1799, depict the fort with the river flowing close to its southern gates. The river, which was once a vital artery for the fort's defense and transportation, has shifted its course, leaving the site isolated from its original natural moat.