The palace was built in 1760's by Vallin-Delamothe,
and rebuilt in 1830 - 1838 by A. L. Michailov (he added the wing with
the Balcony hall and an enfilade of grand rooms).
The Yusupov palace is also known as the place where
prince Yusupov and his friends killed Rasputin on the night of December
16-17, 1916. By the decree of the Tsar Rasputin's last name was changed
to a more neutral Novih.
For a short time after the revolution the diplomatic
missions of Sweden and Germany were located here.
In 1919 the palace was handed over to the Peoples
Commissariat of Education, which placed a museum of noble life style
here. The same year the Yusupov family forever left Russia. Starting in
1925 the palace became the Teacher House; latter called the Education
Culture Palace. As I understand, it doesn't serve that purpose now, and
is simply a museum where guided tours are held.