The construction of the present palace began in 1645 during the reign of the fifth Dalai Lama and by 1648 the Potrang Karpo, or White Palace, was completed. The Potrang Marpo, or Red Palace, was added between 1690 and 1694; its construction required the labors of more than 7000 workers and 1500 artists and craftsman. In 1922 the 13th Dalai Lama renovated many chapels and assembly halls in the White Palace and added two stories to the Red Palace. The Potala Palace was only slightly damaged during the Tibetan uprising against the invading Chinese in 1959. Unlike most other Tibetan religious structures, it was not sacked by the Red Guards during the 1960s and 1970s, apparently through the personal intervention of Chou En Lai. As a result, all the chapels and their artifacts are very well preserved.

Entering the East Portal is the Deyang Shar courtyard upon where Dalai Lamas watched Tibetan opera. West of the courtyard is the White Palace within which are two small chapels, the Phakpa Lhakhang and the Chogyal Drubphuk; dating from the seventh century, these chapels are the oldest surviving structures on the hill and also the most sacred. The Potala's most venerated statue, the Arya Lokeshvara, is housed inside the Phapka Lhakhang, and it draws thousands of Tibetan pilgrims each day.

In the middle of the Potala Palace the Red Palace exists, it includes various chambers for worshipping Buddha and chambers housing the eight stupa that contain the remains of fifth through thirteenth Dalai Lama. All the stupas are covered with gold foil. The most magnificent stupa belongs to the fifth Dalai Lama. It is 14.85 meters tall and inlaid with pearl and jade. The palace also collected a large number of sculptures, murals, scripture and other valuable cultural relics.

The Great West Hall in the middle is the largest hall of Potala Palace with an area of 725 sq meters (about 7,804 sq ft). Beautiful murals painted on inner walls described the glory and power of the Fifth Dalai Lama, and the corridor upstairs is also painted by many religious murals such as the figures of Buddhas, Bodhisattvas and Dalai Lamas. There are another three chapels around the Great West Hall. The North Chapel is dedicated to Sakyamuni, Dalai Lamas, Buddhas of Three Generations and Medicine Buddha. The stupa-tombs of the Eighth, Ninth and Eleventh Dalai Lama are also situated here. Besides, Visitors can also find a volume of Kanjur (Beijing Edition) donated by Emperor Yongzheng on the bookshelf. The East Chapel is consecrate to Tsong Khapa, founder of the Yellow Hat Sect. His two-meter-high (6.56 ft) figure is surrounded by other 70 statues of famous lamas. The South Chapel is dedicated to Padmasambhava, a famous Indian monk who introduced Esoteric Buddhism to Tibet in eighth century. To the west of the Great West Hall is the Stupa Chapel where the stupa-tombs of the Fifth, the Tenth and the Twelfth Dalai Lamas are situated in. With a height of 14.85 meters (about 48.72 ft), covered by more than 3,000 kilograms (about 6,613pounds) gold foil and decorated with thousands of pearls, gems, corals, ambers and agates, the Fifth Dalai Lama's stupa-tomb is regarded to be the highest and the most luxury one. The Three-world Hall, which is located on the highest point of Potala Palace, is the holy shrine of Chinese Emperors. It was built in 1690 and Dalai Lamas used to come here to show their respect to the central government every year.