Deoksugung was originally the residence of Prince Wolsan, the older brother of King Seongjong. This residence became a royal 'palace' during the Seven-Year War after all of the other palaces were burned in 1592 during the Japanese invasions of the Seven-Year War. King Seonjo was the first Joseon king to reside at the palace. King Gwanghaegun was crowned in this palace in 1608, and renamed it Gyeongun-gung in 1611. After the official palace was moved to the rebuilt Changdeokgung in 1618, it was used as an auxiliary palace for 270 years and was renamed Seogung (West Palace).
In 1897, after the incident when Emperor Gojong took refuge in the Russian Embassy, he returned to this place and named it Gyeongun-gung again. Expansion of the facility followed after his return. After Emperor Gojong abdicated the throne to Emperor Sunjong, he continued to live in this palace. The palace was then renamed Deoksugung, as a reference to a wish for longevity of Emperor Gojong.